When the spending of consumers, businesses, government, and foreigners (net exports) is less than the aggregate output level of the economy, the Keynesian model result is that:
A. output will rise.
B. output will fall.
C. prices will rise.
D. inventories will tend to decline.
Answer: B
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Arguing that economic growth will eventually stop because we will run out of natural resources:
A. ignores the power of markets to recognize shortages and induce changes in behavior. B. must be correct because scarcity exists. C. is supported today by the fact that richer countries have fewer natural resources. D. will only be correct if growth takes the form of newer, more efficient goods and services.
If the Fed were to announce that fighting inflation is not a high priority for the immediate future ________
A) households might expect higher inflation B) the short run aggregate supply would shift upwards C) firms might begin raising their prices to keep up with expected inflation D) all of the above E) none of the above
For the United States, there is somewhat conflicting evidence whether or not the inflation rate has a unit autoregressive root
For example, for the sample period 1962:I to 1999:IV using the ADF statistic, you cannot reject at the 5% significance level that inflation contains a stochastic trend. However the null hypothesis can be rejected at the 10% significance level. The DF-GLS test rejects the null hypothesis at the five percent level. This result turns out to be sensitive to the number of lags chosen and the sample period. (a) Somewhat intrigued by these findings, you decide to repeat the exercise using Canadian data. Letting the AIC choose the lag length of the ADF regression, which turns out to be three, the ADF statistic is (-1.91). What is your decision regarding the null hypothesis? (b) You also calculate the DF-GLS statistic, which turns out to be (-1.23). Can you reject the null hypothesis in this case? (c) Is it possible for the two test statistics to yield different answers and if so, why? What will be an ideal response?
Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory:
A. has consumed too many oysters. B. is not maximizing his utility. C. should not consume any more oysters. D. is experiencing diminishing marginal utility.