An effort by the Fed to reduce aggregate demand may be thwarted because
A) investment could remain the same or increase because of optimistic expectations by businesses about the future of the economy.
B) investment and interest rates are positively related.
C) investment could fall because of pessimistic expectations.
D) taxes may have been increased.
Ans: A) investment could remain the same or increase because of optimistic expectations by businesses about the future of the economy.
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Indicate whether the statement is true or false
Allocative efficiency best explains ________, and productive efficiency best explains ________
A) why something will be produced; what will be produced B) what will be produced; how something will be produced C) how something will be produced; when something will be produced D) when something will be produced; why something will be produced
Which of the following would require reducing government expenditures and increasing tax rates during a recession?
A. An annually balanced budget policy B. A countercyclical fiscal policy C. A cyclically balanced budget policy D. A policy employing built-in stability
The ________ exchange rate incorporates both the market exchange rate and the product price levels for two countries.
A. real bilateral B. nominal bilateral C. nominal effective D. real effective