When aggregate expenditure is greater than aggregate output, there will be an unplanned build up of inventories.
Answer the following statement true (T) or false (F)
False
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The deposit-creation process can continue as long as
a. banks have required reserves b. banks have excess reserves c. the Fed sells bonds d. banks sell bonds to the public e. the required reserve ratio does not change
If a large change in the variable measured on the x-axis is associated with a small change of the variable measured on the y-axis, the line is ________ and the slope is ________
A) downward-sloping; large B) downward-sloping; small C) upward-sloping; small D) either downward or upward-sloping; small
The federal government's role in providing aid to the poor and the aged is justified because of concerns about
A. Market power. B. Macro failure. C. Inequity. D. Restricted supply.
During the Reagan administration, the Laffer curve was used to argue that:
A. the supply-side effects of tax cuts are relatively small.
B. discretionary tax cuts are unwise because they create stagflation.
C. lower income tax rates could increase tax revenues.
D. a "flat tax" would simplify the tax code and stimulate economic growth.