Which of the following is a potential operating instrument for the central bank?
A) the monetary base
B) the M1 money supply
C) nominal GDP
D) the discount rate
A
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The main argument in favor of the existence of a natural rate of unemployment in the long run focuses on what argument?
A. Wages will always adjust to make the long-run unemployment rate zero percent. B. The government cannot affect inflation in the long run. C. Workers refuse to be unemployed in the long run. D. Workers will adjust their inflationary expectations in the long run so that unemployment is unrelated to inflation. E. Firms need to be at full employment in the long run.
Suppose that the government spends more on a missile defense program. What does this do to aggregate demand? How is your answer affected by the presence of the multiplier, crowding-out, taxes, and investment-accelerator effects?
the law of comparative advantage.
What will be an ideal response?
Figure 11-3
In Figure 11-3, which line represents the change in the consumption schedule caused by an increase in the personal income tax?
a.
C1 in graph (a)
b.
C2 in graph (a)
c.
C1 in graph (b)
d.
C2 in graph (b)