“Fiscal policy” is the federal government’s plan for
A. international trade, designed to balance exports and imports.
B. spending and taxes, designed to influence the level of aggregate demand.
C. manipulating the money supply and the control of interest rates.
D. All of the above are correct.
Answer: B
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At the peak of a business cycle, the
A) cyclical unemployment rate is positive. B) unemployment rate is above the natural unemployment rate. C) frictional unemployment rate is zero. D) unemployment rate is below the natural unemployment rate. E) natural unemployment rate is negative.
Over the next three years, the expected path of 1-year interest rates is 4, 1, and 1 percent. The expectations theory of the term structure predicts that the current interest rate on 3-year bond is
A) 1 percent. B) 2 percent. C) 3 percent. D) 4 percent.
Financial instruments with high information costs
A) will usually be more liquid than similar instruments with low information costs. B) will have lower yields than U.S. Treasury securities. C) may not be offered for sale in some states. D) will have lower prices than similar instruments with low information costs.
Although the long-run equilibrium price of oil is $80 per barrel, some producers have much lower costs because their oil reserves are relatively close to the surface and are easier to extract
If the low-cost producers have a minimum LAC equal to $20 per barrel, then the difference ($60 per barrel) is: A) an above-normal economic profit. B) an economic rent due to the scarcity of low-cost oil reserves. C) a profit that will go to zero as new oil producers enter the market. D) none of the above