The 2006-2007 recovery of stock prices from their 2000-2001 collapse was largely a reflection of
A. increased earnings forecasts and low long-term interest rates.
B. the Enron scandals.
C. reduced earnings forecasts and high long-term interest rates.
D. the Democrat sweep of Congress.
Answer: A
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Suppose GDP is $10 billion, consumption expenditure is $7 billion, investment is $2 billion, and government expenditure on goods and services is $2 billion. Net exports of goods and services must be
A) $1 billion. B) -$2 billion. C) -$1 billion. D) $2 billion. E) $10 billion.
Stagflation caused by a negative supply shock makes macroeconomic policy very difficult; trying to reduce the size of a recession caused by the shock leads to a higher price level
a. True b. False Indicate whether the statement is true or false
Suppose that the economy is at an inflation rate such that unemployment is above the natural rate. How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer
If consumption is $1,230 when disposable income is $1,420, and consumption is $1,400 when disposable income is $1,620, then the marginal propensity to consume (MPC) is
A) 1.15. B) 0.15. C) 6.67. D) 0.85.