In an article regarding Bangladesh's economy, the author suggests that the government give tax breaks on investment dollars, research and development, and donations to educational institutions. Suppose the multiplier in Bangladesh is 2. If the government enacts the proposed policies and __________, aggregate expenditure __________ in the short run.
a) induced expenditure increases by $5 billion; increases by $10 billion
b) autonomous expenditure decreases by $10 billion; decreases by $5 billion
c) equilibrium expenditure increases by $8 billion; increases by $16 billion
d) autonomous expenditure increases by $10 billion; increases by $20 billion
d) autonomous expenditure increases by $10 billion; increases by $20 billion
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The Federal Reserve's two main ________ are the money supply and the interest rate
A) fiscal tools B) fiscal policy targets C) policy tools D) monetary policy targets
The construct of a representative firm is most helpful in describing the behavior of all of the firms in the economy when
A) there are constant returns to scale. B) there are increasing returns to scale. C) there are decreasing returns to scale. D) the marginal product of labor is increasing in the amount of labor input.
Which of the following observations concerning leading economic indicators is true? a. They provide warnings of likely downturns
b. They provide accurate information on the depth of a downturn. c. They provide accurate information on the duration of a downturn. d. Both b. and c. are true.
Most economists believe that the theory of rational expectations is
a. more correct in the long run than the short run. b. more correct in the short run than the long run. c. correct in both the long run and short run. d. incorrect because it is based on false logic.