If the MPC is 0.9, then the government spending multiplier is:
a) 0.1
b) 1.11
c) 9
d) 10
Ans: d) 10
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According to some New Keynesian theories, one possible rationale for active policy making is
A) growing competition in U.S. product markets. B) flexible prices. C) sluggish adjustment of the price level in response to changes in aggregate demand D) people are not rational and so do not react to incentives.
A bank has $400 in checkable deposits, $800 in savings deposits, $700 in time deposits, $900 in loans to businesses, $300 in outstanding credit card balances,
$500 in government securities, $10 in currency in its vault, and $20 in deposits at the Fed. The bank's deposits that are part of M1 are equal to A) $1,900. B) $400. C) $1,210. D) $530. E) $410.
Explain for each event whether it changes the quantity of real GDP supplied, short-run aggregate supply, long-run aggregate supply, or a combination of them
What will be an ideal response?
Theoretically, the price of a field hand on the New Orleans slave market would have
a. varied directly with the price of cotton. b. risen as interest rates fell. c. risen when the importation of slaves became illegal. d. All of the above are true.