Generally, when the Federal Reserve lowers interest rates, investment spending ________ and GDP ________.
A. increases; decreases
B. increases; increases
C. decreases; decreases
D. decreases; increases
Answer: B
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With respect to economic freedom, which of the following is TRUE?
A) Three out of four people live in nations with governments that grant residents high degrees of economic freedom. B) About three dozen nations with governments unwilling to grant much in the way of economic freedom are home to two-thirds of the world's population. Even so, these countries produce over 50 percent of the world's output. C) Where governments do not grant residents a high degree of economic freedom, economic growth rates tend to be above the annual average for the world's nations. D) As economic freedom increases, so does a nation's prospects for economic growth.
The production possibilities frontier illustrates the
A) maximum combinations of goods and services that can be produced. B) resources the economy possess, but not its level of technology. C) goods and services that people want. D) limits to people's wants. E) amount of each good that people want to buy.
For-profit producers will produce only private goods because
A) buyers will be willing to pay for the goods since the benefits are excludable. B) all external benefits can be internalized using market prices. C) the cost of production can be easily determined. D) markets exist for private goods but not for public goods.
To what extent should monetary policy be used to fine-tune the economy?