In the self-correcting AD-AS model, the economy's short-run equilibrium position is indicated by the intersection of which two curves?
A. short-run aggregate supply and long-run aggregate supply
B. short-run aggregate supply and aggregate demand
C. long-run aggregate supply and aggregate demand
D. long-run aggregate demand and short-run personal consumption expenditures curve
Answer: B
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Keynesians believe that the most important shocks for affecting the business cycle are
A) productivity shocks. B) aggregate supply shocks. C) aggregate demand shocks. D) government spending shocks.
A major U.S. motive for negotiating a free-trade agreement with Mexico was to
a. help foster the study of the Spanish language as a means to trading with all Spanish-speaking countries b. increase immigration into the United States c. gain increased access to Mexican consumers d. keep Mexico from going Communist e. achieve, ultimately, political union with Mexico
Which of the following monetary policies would be appropriate to close a recessionary gap?
a. A tax cut b. A decrease in government purchases c. An increase in reserve requirements d. The Fed's purchase of U.S. government securities e. The Fed's raising the discount rate
Taxes on labor have the effect of encouraging
a. workers to work more hours. b. the elderly to postpone retirement. c. second earners within a family to take a job. d. unscrupulous people to take part in the underground economy.