In developing countries, government expenditure levels are most closely related to:
A. what will bring about regime change.
B. considerations about what will keep the existing government in power.
C. what activist fiscal policy is necessary to achieve potential output.
D. what is necessary to achieve long-term macroeconomic objectives.
Answer: B
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A recessionary gap in an economy can be closed with a contractionary monetary policy
a. True b. False Indicate whether the statement is true or false
Determine how each of the following situations would affect the demand for current consumption, the supply of current consumption, and the interest rate.
(i) Cuban immigrants, who own no capital of their own, arrive in the country. (ii) A drought lowers farmers' productivity this year, but rainfall levels are expected to return to normal next year. (iii) Scientists announce that a new lubricant that will double engine life will be available next year.
When the Fed chooses to target interest rates, it loses the ability to target monetary aggregates
Indicate whether the statement is true or false
The production possibilities curve represents the fact that:
A) the economy will automatically end up at full employment. B) an economy's productive capacity increases proportionally with its population. C) if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. D) economic production possibilities have no limit.