Assume individuals consider only the short run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose current taxes are cut and that individuals expect future taxes to decrease. Given this information, we know with certainty that
A) current output and the current interest rate will both increase.
B) current output will increase.
C) the current interest rate will increase.
D) the current output effects are ambiguous.
D
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Annie had a job as a human resource manager of a restaurant chain that went out of business due to a downturn in the economy
She looked for work for six months and gave up because she was convinced that she could not find a suitable job to fit her skill set. In this instance she would be counted as a A) job leaver. B) reentrant. C) discouraged worker. D) labor force participant.
Import restrictions usually benefit domestic producers at the expense of domestic consumers
a. True b. False
An increase in subsidies and other government spending during a recession is likely to result in
a. an increase in rent-seeking activity. b. an increase in productive projects and a reduction in unproductive projects. c. a decrease in the level of future taxes. d. greater reliance on profits and losses in the allocation of resources.
Twenty years ago, Dr. Montgomery borrowed money from her parents to pay her tuition at graduate school. Now she wants to pay them back. She gives them double what they gave her. According to the rule of 70, what interest rate would have given her parents the same amount of money if they had put it in the bank rather than lending it to their daughter?
a. 3.5 percent b. 4.5 percent c. 5 percent d. 7 percent