Economists and policy makers questioned the effectiveness of discretionary fiscal policy during the 1970s for all the following reasons except:
a. the difficulty of estimating the natural rate of unemployment
b. the time lags involved in implementing fiscal policy.
c. the existence of possible feedback effects of fiscal policy on aggregate supply.
d. the distinction between current and permanent income.
e. the possible feedback effects of fiscal policy on aggregate demand.
e
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When dealing with present value, a higher interest rate:
A. does not affect the present value of the future amount. B. decreases the present value of a future amount. C. increases the present value of a future amount. D. None of the statements associated with this question are correct.
Loans are examples of a bank's:
A. assets. B. liabilities. C. net worth. D. balance sheet.
Because of the law of diminishing marginal utility, total utility of consuming any good or service
a. increases at a decreasing rate as we consume more of any good or service. b. decreases as we consume more of any good or service. c. stays the same. d. none of the above
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.