While many analysts defended the actions taken by the Fed and the Treasury to respond to the financial crisis in 2008, others were critical of these actions. The critics were concerned that by not allowing large firms to fail,
A) stockholders and bondholders of these firms were not allowed to receive the proceeds from the sale of assets that would have occurred if the firms had declared bankruptcy.
B) there will be less competition in the U.S. economy, which could led to higher prices for consumers.
C) smaller firms will resent not receiving similar assistance.
D) there is an increased likelihood that other firms will engage in risky behavior in the future with the expectation that they will also not be allowed to fail.
D
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The Keynesian aggregate supply schedule slopes upward because of
a. unstable expectations. b. inflexible wages and prices. c. changes in technology. d. differences between actual and expected price levels.
The Ricardian equivalence theorem suggests that an increase in the government budget deficit created by a tax cut will
A. decrease real Gross Domestic Product (GDP) in the short run, but increase it in the long run. B. increase real Gross Domestic Product (GDP) in both the short and long run. C. increase real Gross Domestic Product (GDP) in the short run, but decrease it in the long run. D. have no effect on real Gross Domestic Product (GDP) in either the short run or the long run.
For the past several decades, the U.S. M1 multiplier has been between
A. 0.5 and 2.5. B. 1.0 and 3.0. C. 3.0 and 6.0. D. 0 and 10.0.
Stagflation occurs when the economy's ________ are both high.
A. inflation rate and growth rate B. inflation rate and unemployment rate C. unemployment rate and deflation rate D. unemployment rate and growth rate