In the liquidity trap case where the LM schedule is nearly horizontal,
a. both monetary and fiscal policy are highly effective.
b. monetary and fiscal policy are ineffective.
c. monetary policy is ineffective and fiscal policy is effective.
d. fiscal policy is ineffective and monetary policy is effective.
C
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In the treatment of U.S. exports and imports, national income accountants ________.
A. add both exports and imports in calculating GDP B. subtract exports but add imports in calculating GDP C. subtract both exports and imports in calculating GDP D. add exports but subtract imports in calculating GDP
The equation of exchange specifies that
A) MsV = PY. B) velocity and money supply are directly related. C) MsP = VY. D) Ms = PVY.
Based on the above scenario, is the industry in the long run equilibrium?
a. yes, because all firms are producing at P=MR=MC b. no, because the price is still greater than the minimum average total cost. c. cannot answer because need information on MR d. cannot answer unless we see that the market lets some firms enter and/or some firms exit.
In a certain economy, the components of planned spending are given by: C = 500 + 0.8 (Y - T) - 300rI P = 200 - 400rG = 200NX = 10T = 150 Given the information about the economy above, what would be the impact on short-run equilibrium output of a one-percentage-point increase in the real interest rate, assuming the income-expenditure multiplier equals 5?
A. Short-run equilibrium output would decrease by 35 units. B. Short-run equilibrium output would decrease by 700 units. C. Short-run equilibrium output would decrease by 7 units. D. Short-run equilibrium output would increase by 35 units.