The 2007-2009 recession began with reductions in investment and consumption spending, precipitated by a financial crisis. This explanation for the recession is consistent with
A. the monetarist view of macroeconomic instability.
B. the mainstream view of macroeconomic instability.
C. the rational expectations view of macroeconomic instability.
D. the real business cycle theory of macroeconomic instability.
Answer: B
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Figure 4.4 illustrates the supply of tacos. An increase in the price of ground beef, which is used to make tacos, would most likely cause a movement from
A) point a to point b. B) point c to point b. C) S2 to S1. D) S0 to S1.
If firms pollute when they produce,
a. marginal social cost equals marginal private cost b. marginal private cost exceeds marginal social cost c. marginal social cost exceeds marginal private cost d. marginal social cost equals marginal external cost e. marginal social cost equals marginal private cost, which equals marginal external cost
Statistical analysis reveals that the long-run money velocity (for euro-area M3, which is equivalent to U.S. M2):
A. is much more stable in the U.S. than in the euro area. B. is unstable in the euro similar to the instability that exists in the U.S. C. has increased in the euro area since 1980. D. is more stable in the euro area than in the U.S.
A “liberal” would most likely argue in favor of
A. tax increases when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. B. tax cuts when fiscal restraint is necessary, and spending cuts when fiscal stimulus is necessary. C. tax cuts when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. D. spending increases when fiscal expansion is necessary, and tax increases when fiscal restraint is necessary.