An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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How does the natural unemployment rate change and what factors might make it change?
What will be an ideal response?
The high point in the business cycle is referred to as the
A) turning point. B) peak. C) boom. D) trough.
Land used to grow alfalfa could also be used to grow hay. Which of the following is true when the farmer plants hay and the market price of alfalfa rises?
a. The opportunity cost of producing hay decreases. b. The opportunity cost of producing hay increases. c. There will be no change in the opportunity cost of producing hay. d. The opportunity cost of producing alfalfa increases.
Contrast the Keynesian and Monetarist views on the effectiveness of fiscal policy.
What will be an ideal response?