Refer to the above figure. Suppose that the economy starts at AD1. If the government reduces taxes, then the economy goes to AD2, but then falls back to AD3. This is an example of
A) complete crowding-out effect.
B) partial crowding-out effect.
C) Ricardian equivalence.
D) laissez-faire.
B
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Easy monetary policy will ________ net exports as a result of a ________ currency.
A. increase; stronger B. decrease; stronger C. decrease; weaker D. increase; weaker
What is the limitation of using exchange rate-based measures as indicators of the standard of living across countries?
What will be an ideal response?
If a firm buys a specialized metal stamping machine that will last 4 years for $125,000 and cannot resell it, the opportunity cost is
A) $0. B) $31,250. C) $125,000. D) $93,750.
When the actual price level in an economy turns out to be lower than that expected in the short run, _____
a. businesses cut back production b. the potential output level decreases c. the aggregate supply curve shifts leftward d. the aggregate supply curve shifts rightward e. an expansionary gap develops