Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?
A) Services have become a smaller fraction of GDP since the 1950s.
B) Unemployment insurance and other government transfer programs are more prevalent since the 1950s.
C) The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s.
D) both B and C
B
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If the money supply is $1 billion, the reserve requirement is 10%, and currency holding $50 million, then reserves are
a. $50 million. b. $100 million. c. $20 million. d. $40 million. e. none of the above
Assuming plasma TVs are a normal good, an increase in consumer incomes will lead to
A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs.
If the annual interest rate is 4 percent, a consumer who spends $100 today
a. will have to pay back $104 to the bank b. would have to pay $104 next year to get the same goods c. will receive $96 from the bank next year d. would have to pay $96 next year to get the same goods e. is giving up the ability to spend $104 on goods next year
According to the theory of rational expectations, errors in predicting inflation will
a. be biased upward more often than not. b. be purely random. c. tend to be biased downward when inflation is rising, and tend to be biased upward when inflation is falling. d. tend to be biased upward when inflation is rising, and tend to be biased downward when inflation is falling.