Considering its direct effect on income, which of the following policies is most likely to reduce a country's trade deficit?
A. An increase in the money supply
B. An increase in taxes
C. An increase in government spending
D. A cut in taxes
Answer: B
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If the aggregate supply curve is steep,
A. increased aggregate demand will not lead to higher prices. B. greater demand for labor will not cause significant wage increases. C. business firms are probably producing near capacity. D. All of these responses are correct.
Automatic stabilizers smooth fluctuations in the economy because they produce changes in the government's budget that
A. reinforce changes in GDP. B. produce a dynamically-adjusted budget. C. produce a standardized budget. D. help offset changes in GDP.
Monetarists would likely argue that the severe recession of 2007-2009 was primarily caused by
A. too much deregulation of the financial sector in previous years. B. excessive money supply creating a bubble in some sectors of the economy. C. wide swings in investment expenditures driving erratic fluctuations in aggregate demand. D. adverse aggregate-supply shocks causing tremendous unemployment.
We say that money is a store of value because it represents:
A. a standard unit of comparison. B. a certain amount of purchasing power held over time. C. something you can directly offer, like any good or service, in exchange for some good or service you want. D. something you can use to purchase goods and services.