The existence of an underground economy,
a. tends to overstate the actual value of GDP
b. tends to accurately portray the value of GDP
c. tends to understate the actual value of GDP
d. undermines GDP equilibrium
e. undermines GDP and national income equilibrium
C
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Which of the following is false about a liquidity trap situation: a. The Fed could not appreciably raise short term interest rates
b. If the Fed added reserves to the banking system, it would have little effect on investment. c. Traditional monetary policy would be relatively weak in its effects on aggregate demand. d. Expansionary monetary policy would tend to increase excess reserves in the banking system.
The structural deficit can be defined as
a. the deficit that is structurally obstructing economic recovery to reach level of high employment. b. a hypothetical construct that estimates the deficit, given current tax rates and expenditure policies, if the economy were operating at some fixed high-employment level. c. the deficit necessary to restructure the economy and reach a desired high-employment level. d. the deficit that would prevail if fiscal policy were structured differently in order to reach a desired high-employment level.
According to the law of supply, the higher the price the greater the quantity supplied
Indicate whether the statement is true or false
According to the Phillips curve, policymakers would reduce inflation but raise unemployment if they
a. decreased the money supply. b. increased government expenditures. c. decreased taxes. d. None of the above is correct.