Which of the following best describes the policy of the New Deal to combat the Great Depression?
(a) Taxation should be increased so as to eliminate the deficit in the federal budget.
(b) Government spending should be reduced so as to give businesses confidence that the free enterprise system was not being replaced by big government.
(c) The government should offset deficiencies in private spending with increased government spending in order to create jobs—any jobs.
(d) Private enterprise should be replaced by government planning because the market system had failed to provide prosperity and economic growth.
(c)
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Which of the following is a primary implication of the accelerator theory of investment?
A) Net investment occurs when the desired and actual capital stocks are equal. B) In order for gross investment to remain constant, income must remain constant. C) Rising rather than high levels of output are necessary to maintain a high level of net investment. D) B and C are both correct.
Monetary policy has no effect on the equilibrium interest rate if
A) the inflation rate is zero. B) the economy is in the liquidity trap. C) velocity is constant. D) the economy is at full employment.
The price of a ride on the Washington, D.C. metro depends on the time of day you ride. This is an example of
A. exploitation. B. inefficiency. C. political interference with a market. D. pricing to spread out demand.
GDP based on the expenditure approach includes:
a. depreciation, rent, automobile sales, and stock purchases. b. inventory changes, stock dividends, imports, and bank payments to customers. c. consumption, investment, government purchases, and net exports. d. wages, interest, rent, and profits from production.