The Lucas supply function states that real output will not change from its fixed level
A. only if there is a positive price surprise.
B. only if there is a negative price surprise.
C. only if there is no price surprise.
D. Both A and B are possible.
Answer: C
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Answer the next question using the following budget information for a hypothetical economy. All data are in billions of dollars. Government SpendingTax RevenuesGDPYear 1$800$825$4,000Year 28508504,200Year 39008754,350Year 49509004,500Year 51,0009254,600In which year is there a budget surplus?
A. Year 1 B. Year 2 C. Year 4 D. Year 5
Which of the following factors would decrease in the quantity of investment demanded?
A. A decrease in business taxes B. An increase in the rate of technological change C. An increase in the interest rate D. A decrease in the stock of capital goods on hand
Which of the following is NOT a tool used by the Fed to implement monetary policy?
A. Printing Federal Reserve notes and minting coins B. The discount rate C. The reserve requirement D. Open market operations
Which is a screen against adverse selection
a. Insurance companies require homeowners to have smoke detectors b. Rearview cameras in cars c. Installing engine monitors to track driving habits of the insured d. Prospective secretaries must take a typing test before being hired