Which of the following is a short-run adjustment?
A. Three new firms enter the computer chip industry.
B. A firm hires six new workers.
C. The number of farms in Kansas increases by 10%.
D. A firm opens two new plants.
Answer: B
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The magnitude of the government expenditure multiplier is ________ the magnitude of the tax multiplier
A) not comparable to B) greater than C) less than D) equal to E) greater than for expansionary policy and less than for contractionary policy
Fred buys a fresh-off-the-assembly-line car from Wee-Rob-U Auto Sales. He paid $27,500, even though Wee-Rob-U acquired it for $23,000. What happens to this year's GDP?
A) Nothing. B) It increases by $4,500. C) It increases by $23,000. D) It increases by $27,500. E) It decreases by $4,500, because the dealer robbed Fred.
A persistent shortage or surplus of a currency under the Bretton Woods system was evidence of
A) failure to support the existing fixed exchange rate by central banks. B) speculation against the currency by speculators in world exchange markets. C) fundamental disequilibrium in the country's exchange rate. D) all of the above
If there is a political business cycle and the Federal Reserve supports the incumbent, then we should expect that prior to elections
a. interest rates and output would rise.
b. interest rates would rise and output would fall.
c. interest rates would fall and output would rise.
d. interest rates and output would fall.