The case for government stabilization policy is made more compelling if the
A. self-correcting mechanism works very slowly.
B. self-correcting mechanism works too fast.
C. value of the multiplier is very small.
D. aggregate supply curve is very flat.
Answer: A
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Unlike the minimum wage, the Earned Income Tax Credit does not:
A. create an incentive for employers to lay off low-wage workers. B. improve the economic well-being of the working poor. C. increase total economic surplus. D. cost the government money.
The Fed has adopted an interest rate target for most of the time since World War II
Indicate whether the statement is true or false
If the money supply is $600 and nominal income is $3,600, the velocity of money is
A) 1/60. B) 1/6. C) 6. D) 60.
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and monetary base in the context of the Three-Sector-Model? a. Real GDP rises and monetary base rises
b. Real GDP rises and monetary base falls. c. Real GDP and monetary base fall. d. Real GDP and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.