Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting downward
C. Aggregate demand shifting rightward
D. Aggregate demand shifting leftward
Answer: B
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Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?
What will be an ideal response?
Which of the statements best describes the difference between economic regulation and social regulation?
A) There are no significant differences between economic and social regulation, social regulation is a more modern way of regulating an economy. B) Economic regulation focuses on output and price; social regulation focuses on improving the quality of life. C) Social regulation focuses on output and price; economic regulation focuses on quality of life issues. D) Social regulation targets industries like transportation, while economic regulation targets utilities.
The Federal Reserve (Fed) was criticized for playing a role in causing the Great Recession. Which of the following criticisms most accurately captures this criticism?
a. The Fed kept monetary policy loose for too long, thereby fueling speculation in the housing market. b. The Fed kept monetary policy too tight immediately after the 2001 recession and then loosened it just prior to the recession, thereby precipitating the crisis. c.The Fed relaxed banking regulations after the 2001 recession, causing banks and other financial institutions to engage in speculative activities for which they were unprepared. d. The Fed encouraged home ownership by putting pressure on Fannie Mae and Freddie Mac.
Which statement is false?
A. Our balance of payments is the entire flow of U.S. dollars and foreign currencies into and out of the country. B. Our trade balance is just the difference between our imports and our exports. C. Our trade balance has been negative since the mid-1970s. D. None of these statements are false