The cyclical surplus is $450 billion, potential output is $10 trillion and tax rate is 15 percent. With this information, we can infer that the actual output of this economy is:
A. $13.5 trillion.
B. $6.5 trillion.
C. $6 trillion.
D. $13 trillion.
Answer: D
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If expectations are adaptive, how will the economy adjust to a new long-run equilibrium in response to contractionary monetary policy? Support your answer with a graph of the Phillips curve
What will be an ideal response?
According to Revealed Preferences, if a Consumer chooses a more expensive bundle of goods over a cheaper bundle of goods, we can conclude
A) the consumer prefers the more expensive bundle of goods. B) the consumer is behaving irrationally. C) the consumer is unaware of the cheaper bundle of goods. D) the consumer has convex preferences.
The circular flow model ignores a host of major economic institutions and activities. Focusing on only one basic fact about how the economy works is the model's
a. way of getting around the ceteris paribus assumption b. disadvantage because it distorts reality c. flaw because there is no one single fact about an economy d. strength in providing some understanding about how the economy works e. effectiveness in creating policy recommendations
European banks began with which of the following?
a. Churches were the first bankers, lending out cash to help the poor learn a craft. b. Monarchs were the first bankers, lending out cash to help the poor learn a craft. c. Goldsmiths were the first bankers, and the paper receipts they issued for gold held on deposit became valued as money. d. Fishermen were the first bankers, and the paper receipts they issued for fish they stored in the holds of their ships became valued as money.