In the expansion phase of a business cycle
A. the inflation rate and productive capacity decrease.
B. employment increases, but output decreases.
C. the inflation rate decreases, but productive capacity increases.
D. employment and output increase.
Answer: D
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Refer to Figure 28-9. A follower of the new classical macroeconomics would argue that a contractionary monetary policy to lower inflation after a supply shock, like that pursued by Volcker in 1979, would result in a movement from
A) C to D to A. B) A to B. C) C to A. D) A to C. E) A to D to C.
Countries with lower levels of economic freedom tend to have
a. lower levels of economic growth b. higher levels of per person income c. higher levels of investment d. all of the above
Which of the following economic variables is exogenous in the Three-Sector-Model?
a. Government spending on goods and services. b. Real GDP. c. GDP price index. d. Quantity of the domestic currency per time period. e. None of the above.
"Supply creates its own demand" implies that
A. the very act of supplying a particular level of goods and services will not necessarily equal the level of goods and services demanded. B. the government will buy up any surplus of goods and services in a country to avoid economic problems. C. the very act of demanding a particular level of goods and services necessarily equals the level of goods and services supplied. D. the very act of supplying a particular level of goods and services necessarily equals the level of goods and services demanded.