Following the financial collapse in late 2008, the deficit increased, in part because of the
A. weakened state of the economy caused increased spending on unemployment compensation.
B. high short-term interest rates and restrictive monetary policy.
C. massive expansion of foreign aid to Central American democracies.
D. U.S. return to the gold standard.
Answer: A
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Exhibit 30-3 Costs of Eliminating:Firm A Firm B Firm C 1st ton of pollution$ 30 $ 50 $ 600 2nd ton of pollution$ 70 $ 90 $ 700 3rd ton of pollution$125 $150 $ 900 4th ton of pollution$200 $250 $1,300 Refer to Exhibit 30-3. What is the cost to Firm B of eliminating 2 tons of pollution?
A. $350 B. $250 C. $300 D. $140 E. $540
During the 1950s, Fed monetary policy targeted
A) the monetary base. B) the exchange rate. C) discount loans. D) interest rates.
According to the quantity theory of money, if velocity of money is constant, a 5 percent increase in money supply will lead to a 0.25 percent increase in nominal GDP
a. True b. False Indicate whether the statement is true or false