Recent Question

The aggregate demand curve is downward sloping because a higher price level 1. According to the modern quantity theory of money an increase in the money supply will result in an increase in the nominal level of income until a) velocity is unchanged b) the interest rate returns to its original level c) the demand for money rises by exactly the increase in the money supply d) the price level increases by the same percentage as the mon ...

Other / Other 07 May 2016

Jorgenson said that the high cost of imported energy will cause business in general 1. "One of the professors' more controversial findings is that public investment in physical capital (as opposed to human capital) in the last forty years has had a negative effect on economic growth. The researchers speculate that this is because public investment has "crowded out" ......" This is best completed with a) imports b) exports c) consumption ...

Other / Other 07 May 2016

Some economists believe the economy is able to grow without 1. In the long run, the rate of growth of real wages is approximately equal to the rate of a) inflation b) growth of labor productivity c) growth of labor productivity plus inflation d) growth of labor productivity minus inflation 2. An expansionary monetary policy and contractionary fiscal policy mix would increase future economic growth if it promoted a) low interest ...

Other / Other 07 May 2016

What technical term do economists use to talk about the phenomenon being discussed here 1. "Given the low level of savings and investment, some economists now fear that the United States will be lucky during the 1990s to match the record of the 1980s when the amount of goods and services produced by each worker rose a scant 0.8 percent a year." What technical term do economists use to talk about the phenomenon being discussed here ? a) ...

Other / Other 07 May 2016

Should taxes be reduced on corporate profits 1. "He favors a slow recovery, for example, partly because the 'natural rate of unemployment' may turn out to be higher than anyone thinks." The rationale behind the suggestion that policy should push the economy out of recession slowly rather than quickly is that a) if the natural rate of unemployment is overestimated inflation could be created b) if the natural rate of unemployment is unde ...

Other / Other 07 May 2016

How many of them could virtually double public spending without raising taxes 1. “Keynesian theory says stimulate by lowering taxes. But what do you think a typical worker, given a thousand-dollar tax break during a major recession, will likely do with it?” The best answer to this rhetorical question is a) divide it equally between spending and saving b) spend most of it and save the rest c) save most of it and spend the ...

Other / Other 07 May 2016

We can consume more than we produce by selling government bonds to 1. Crowding out involves a reduction in a) I (investment demand) b) I and C (consumption demand) c) I, C, and G (government demand) d) I, C, G and X (export demand) 2. A decision by the government to increase its spending by $2 billion will have the largest impact on aggregate demand when it is financed by selling bonds to a) the public b) the commercial banks c) ...

Other / Other 07 May 2016

Which policy reaction is most appropriate 1. "The" multiplier definitely becomes bigger if a) the MPC (marginal propensity to consume) and the MPM (marginal propensity to import) become bigger b) the MPC and the MPM become smaller c) the MPC becomes bigger and the MPM becomes smaller d) the MPC becomes smaller and the MPM becomes bigger 2. If everyone is forced to pay an extra $100 in taxes each year, "the" multiplier a) is un ...

Other / Other 07 May 2016

This offset would happen because higher money costs would cause 1. Suppose that an increase in GDP of $100 increases taxes by $30, imports by $12, consumption by $60, and investment by $2. After three rounds of the multiplier process, by how much will an increase in government spending of $2,000 have increased income? a) $2,000 or less b) more than $2,000 but not more than $3,000 c) more than $3,000 but not more than $4,000 d) more th ...

Other / Other 07 May 2016

How would this policy be reflected on an AS/AD diagram 1. "One striking challenge came from "supply-side" economists who contended that the sheer waste and perverse incentives associated with high tax rates created opportunities to cut tax rates without cutting ......." Complete this sentence. a) inflation b) tax receipts c) employment d) budget deficits 2. "Supply-side economics, packaged and popularized as 'Reaganomics,' has become a ...

Other / Other 07 May 2016