Using fiscal policy to stabilize the economy is difficult because:
A. potential income is known.
B. the size of the government debt doesn't matter.
C. the effects of policy changes are known with certainty.
D. there are time lags involved in the use of fiscal policy.
Answer: D
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Suppose the shift from AD0 to AD1 and from AS0 to AS1 is the result of fiscal policy. Which of the policies below could lead to these shifts?
i. An increase in government expenditure ii. A tax cut iii. A decrease in government expenditure iv. A tax hike A) iv only B) i and ii C) i and iv D) i only E) iii and iv
An uninformed party can use ________ to learn about the information held by the informed party
A) signaling B) screening C) a warranty D) educational attainment
Other things remaining the same, a decrease in the real return on bonds causes the velocity of money to:
a. Rise. b. Fall. c. Not change.
Marvin's Metal Company produces screws that it sells to Ford, which uses the screws as a component of its cars. In the national income accounts, the screws are classified as
A) inventory. B) final goods. C) capital goods. D) intermediate goods.