Many economists maintain that
a. the aggregate supply curve is nearly horizontal at low levels of real GDP.
b. the aggregate supply curve is nearly vertical at very high levels of real GDP.
c. any change in aggregate demand will have most of its effect on output when economic activity is low but on prices when the economy is near full employment.
d. All of the above are correct.
d
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Suppose that a series of decisions by banks effectively raises e. The resulting ________ in the money supply could be offset by the Fed with a "defensive" open market ________ of government securities
A) rise, purchase B) rise, sale C) fall, purchase D) fall, sale
Suppose that a bond-financed deficit shifts the IS curve to the right, taking IS-LM equilibrium "northeast" from point A to point B
If government bonds are considered net wealth by the public sector, then by the portfolio theory of asset-holding there is an excess ________ money at point B because the LM curve has shifted ________ with increased wealth, and thus the fiscal policy turns out to be ________ expansionary than without the wealth effect. A) demand for, downward, more B) demand for, downward, less C) demand for, upward, less D) supply of, downward, more E) supply of, upward, more
In the long run, there is a tradeoff between inflation and unemployment
a. True b. False
California passed a law called "Proposition 2 1/2" that limited property taxes to 2.5 percent of property value. Naturally this reduced taxes on many properties, and apartment landlords had more money at the end of the year at given rents. This windfall could be called an economic rent only if
a. we push the definition of economic rent too far. b. the supply of rental units can be expanded. c. the supply of rental units is fixed. d. competitors can build housing at costs that yield the return that was earned before the tax cut.