If our economy is growing at a constant rate of 2 percent per year, then over a period of 20 years we would expect to see which of the following?
A. an upward sloping growth path
B. nice, steady flat-line growth
C. a downward sloping growth path
D. It is impossible to say what kind of growth path we would see.
Answer: A
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Which of the following is likely to happen if the reserves held at the Fed by the private banks decrease?
A) Banks will make more loans. B) The M2 measure of money will decrease. C) The nominal interest rate will decrease. D) Labor demand will increase.
If the saving rate increases, a country's growth rate of real GDP per hour of labor ________ and capital per hour of labor ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
If you believe that the LM curve is horizontal, what type of policy would you recommend to stimulate the economy?
A) An increase in government spending B) A reduction in government spending C) An increase in the money supply D) A reduction in the interest rate
A cost or benefit of a good imposed on people other than the consumers or producer of a good is called a(n):
a. public good. b. merit good. c. private good. d. externality.