Suppose government purchases increase by $100 million in an economy, which leads to total output increasing by $500 million. The size of the multiplier is _____
a. $400
b. 5
c. $500
d. 0.5
e. 50
e
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If the government adopts expansionary monetary policy during a recession, ________
A) tax rates increase B) government spending falls C) access to credit increases D) interest rates increase
Using expansionary policies to combat a recession would
A) decrease discretionary spending. B) increase federal revenue. C) increase a budget surplus. D) increase a budget deficit.
Suppose penalties are imposed on both buyers and sellers of marijuana, but the cost of breaking the law to sellers is greater than that to buyers
This measure will ________ the equilibrium price of marijuana and ________ the equilibrium quantity of marijuana sold. A) lower; increase B) raise; increase C) raise; decrease D) not change; will decrease
Some economists believe that the behavior of unemployment in Europe and in the United States during the 1980s and 1990s
A) was the same because both markets experienced adverse labor market shocks. B) differed because the real wage in Europe was rigid. C) was the same because the real wage in Europe and the United States moved together. D) differed because the United States experienced adverse labor market shocks but Europe did not.