The trade feedback effect illustrates the fact that
A. an increase in U.S. economic activity leads to a decrease in the economic activity of other countries.
B. imports affect exports and exports affect imports.
C. U.S. imports depress the imports of other countries.
D. imports and exports are unrelated to one another.
Answer: B
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Although the relationship between output and the unemployment rate is not as simple as Okun's Law represents it to be, it is true that
A. a 1% increase in output tends to correspond to a greater than 1% decrease in the unemployment rate. B. a 1% increase in output will have no effect on the unemployment rate. C. a 1% increase in output tends to correspond to a less than 1% decrease in the unemployment rate. D. a 1% increase in output tends to correspond to a 1% decrease in the unemployment rate.
Explain whether you agree with the following statement: Some economists claim that the recession of 2007 - 2009 was caused by a decline in spending on residential construction. This can't be true. If there had just been a decline in spending on residential construction, the only firms hurt would have been home builders and firms selling lumber and other goods used in building houses. In fact, many firms experienced falling sales during that recession, including automobile, appliance, and furniture firms.
A. I agree - the decline in spending on residential construction can't be the cause of the recession B. I disagree - the commentator assumes that the multiplier is greater than zero C. I disagree - the commentator ignores the additional rounds of spending that make up the multiplier process
The earned income tax credit (EITC) is, in essence:
A. A tax credit for corporate contributions to charity B. A tax break for businesses that invest in community programs C. An income payment to those individuals who are not able to work D. A wage subsidy for low-income workers to offset Social Security taxes
Opportunity cost exists because of
A) poverty. B) scarcity. C) greed. D) self-interest.