Time lags in the design, authorization, and implementation of fiscal policy reduce its effectiveness.
Answer the following statement true (T) or false (F)
True
In the time it takes for fiscal policy to take effect, the economy could begin to improve on its own due to other internal or external shocks that may have occurred.
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If the nominal exchange rate were to be expressed as the number of units of domestic currency per unit of foreign currency, and that rate increases, then the domestic currency has:
A. appreciated. B. depreciated. C. become undervalued. D. become overvalued.
If the interest rate on saving is 5 percent per period, then the true opportunity cost of being paid $100 next period instead of this period is
A. $5. B. $105. C. less than $5 if people suffer from a “defective telescopic faculty.” D. more than $5 if people suffer from a “defective telescopic faculty.”
Grace consumes two goods: iced tea and spaghetti. The price of iced tea is $2 per bottle. Her income is $500 per month. Grace spends all her income each month. She purchases 50 bottles of iced tea and 100 servings of spaghetti. What is the price of a serving of spaghetti?
a. $10 b. $5 c. $4 d. $2
Answer the following questions true (T) or false (F)
1. An increase in exports decreases aggregate demand. 2. An increase in disposable income will shift the aggregate demand curve to the right. 3. An increase in the price level causes a movement down the aggregate demand curve.