An advantage of automatic stabilizers is that this type of fiscal policy
A. requires precise knowledge of full-employment real GDP.
B. can be influenced by special interest groups when their concerns are valid.
C. is not subject to lag time problems.
D. accelerates the direction in which the economy is moving at the time.
Answer: C
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What are the economic effects of a currency appreciation?
A. It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well. B. It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well. C. It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise, and output may rise as well. D. It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall, and output may fall as well.
For each of the following scenarios, state the short-run effect on the AD curve
a. The price level decreases. b. The target inflation rate increases. c. The U.S. dollar falls in value relative to other currencies. d. Government spending increases. e. The Fed becomes more tolerant of deviations from the target inflation rate.
Frictional unemployment is
A) related to job search difficulties for potential workers. B) a result of a poor match of worker's abilities and skills with current requirements of employers. C) a result of business recessions that occur when aggregate demand is insufficient to create full employment. D) a result of the seasonal pattern of work in specific industries.
Which of the following is a component of aggregate demand?
What will be an ideal response?