Other things the same, a government budget deficit
a. reduces public saving, but not national saving.
b. reduces national saving, but not public saving.
c. reduces both public and national saving.
d. reduces neither public saving nor national saving.
c
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The Keynesian approach assumes that
A) the economy is self-regulating. B) there is no unemployment in the economy. C) the price level is fixed. D) the government budget is always in deficit.
The effect of a tariff or a quota is to
a. raise the price of a commodity in the exporting country above the price in an importing country. b. raise the price of a commodity in an importing country above the price in the exporting country. c. lower the price of the commodity in all countries. d. raise the price of the commodity in all countries.
Assuming that a is positive, theories of short-run aggregate supply are expressed mathematically as
a. quantity of output supplied = natural rate of output + a(actual price level - expected price level). b. quantity of output supplied = natural rate of output + a(expected price level - actual price level). c. quantity of output supplied = a(actual price level -expected price level) - natural rate of output. d. quantity of output supplied = a(expected price level - actual price level) - natural rate of output.
The monetarists believe that an increase in the money supply of about 4% per year, regardless of economic conditions, is a good monetary policy. Why was 4% chosen?
A. It reflects the fact that the output of the economy has been growing at about 3 to 4% per year, and a 4% increase in the money supply would tend to stabilize the price level. B. By equating the money supply growth rate and the unemployment rate, the monetarists believe that the output of the economy will increase. C. By restricting the increase in money supply to 4%, the monetarists hope to limit fluctuations in the price trend to 4% and stabilize velocity. D. Price fluctuations have been shown to be historically more than 4%. By a steady 4% increase in the money supply, the monetarists hope to drive prices down.