Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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What is the argument against the use of autonomous tightening of monetary policy in response to a credit-driven asset-price bubble?
What will be an ideal response?
Refer to Scenario 5.5. Jalopy Automotive's executives,
A) if risk-neutral, would fix the flaw because it enables them to have a sure outcome. B) if risk-neutral, would fix the flaw because the cost of fixing the flaw is less than the expected cost of not fixing it. C) if risk-loving, would fix the flaw because it enables them to have a sure outcome. D) if risk-averse, would not fix the flaw because the cost of fixing the flaw is more than the expected cost of not fixing it. E) would fix the flaw regardless of their risk preference, because of the large probability of high-cost outcomes.
Special interest groups are subsets of the general population that
A) attempt to influence government officials for the benefit of the general population. B) choose to be rationally ignorant because they are interested only in things that the government is not concerned with. C) are on the fringes of the political spectrum. D) a and c E) none of the above
Discretionary fiscal policy is so named because it:
A. involves specific changes in T and G undertaken expressly for stabilization at the option of Congress. B. is undertaken at the option of the nation's central bank. C. occurs automatically as the nation's level of GDP changes. D. is invoked secretly by the Council of Economic Advisers.