Which of the following is not a criticism of government spending as a solution to an inflationary gap?
a. It's hard to end new programs of government spending.
b. Vested political interests tend to reduce spending.
c. The economy has a natural tendency to self-correct.
d. Government spending is not cost-free.
e. Depreciation will lead to increased investment demand on its own.
B
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If you believe that expectations react quickly, you are likely:
a. a believer in rational expectations b. a Keynesian c. a theoretical economist d. None of these.
According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?
On the 45 degree line diagram, the 45 degree line shows points where
What will be an ideal response?
Assuming that the government can act immediately before the multiplier takes effect, then to offset an increase in investment by $1 billion, government purchases must be:
A. decreased by $2 billion. B. increased by $1 billion. C. decreased by $1 billion. D. decreased by $0.5 billion.