Consumption goods that are produced, but not sold, become investment goods by default
Indicate whether the statement is true or false
T
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Economic analysis indicates that the monetary policy of the 1930s, which shifted back and forth between restrictive monetary policy and expansionary monetary policy, would likely result in
a. economic stability and growth in real levels of output. b. keeping the general level of prices relatively stable because the periods of restrictive policy would just offset the periods of expansion. c. an environment of uncertainty, which would lead to economic instability. d. economic stability, because changes in monetary policy can be counted on to exert a predictable impact on the economy quickly.
Suppose output is above the natural level of output. In a fixed exchange rate regime, explain the two ways the economy can return to the natural level of output
What will be an ideal response?
Government unemployment insurance tends to
What will be an ideal response?
Most Keynesians suggest that the Fed
A. use fiscal policy to combat inflation in the long run. B. follow a rule, such as keeping the money growth rate at 3%, regardless of the state of the economy. C. use discretion in setting monetary policy. D. use fiscal policy to combat unemployment in the short run.