If the government were to put policies in place to regulate carbon emissions from factories, such a policy would be a:
A. tariff.
B. nudge.
C. lobby.
D. push.
Answer: D
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There are four limitations to the effectiveness of discretionary fiscal policy. Which item below is NOT one of these limitations?
A) shrinking area of lawmaker discretion B) lawmaking time lag C) estimating potential GDP D) fiscal multiplier E) economic forecasting
If potential GDP increases, what happens to aggregate supply? Does the LAS curve shift or is there a movement along the LAS curve? Does the SAS curve shift or is there a movement along the SAS curve?
What will be an ideal response?
Suppose the economy is initially in equilibrium where real GDP equals potential GDP and the inflation rate is at the target rate. Other things equal, a housing boom will cause aggregate expenditures to increase, which will result in
A) an increase in aggregate demand and an increase in the inflation rate. B) an increase in aggregate supply and an increase in the inflation rate. C) an increase in aggregate demand and a decrease in the inflation rate. D) an increase in aggregate supply and a decrease in the inflation rate.
If point C is now 9 units of guns and 8 units of butter, the maximum units of guns possible to produce is 17 and the maximum units of butter possible to produce is 13, the production possibility curve would have shifted _____________ (outward/inward).
