Monetarists argue that fiscal policy is ineffective because:
A. the velocity of money is predictable.
B. the crowding-out effect reduces investment.
C. prices and wages are sticky in the short run.
D. it causes the value of the dollar to depreciate.
Answer: B
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The best weather in a decade has given Australia a bumper wheat crop. Australia is a small open economy. Based on this information alone, you would expect that
A) desired investment would decrease. B) desired investment would increase. C) the current account would increase. D) the current account would decrease.
Real consumption tends to be
A) procyclical and less variable than real GDP. B) procyclical and more variable than real GDP. C) countercyclical and less variable than real GDP. D) countercyclical and more variable than real GDP.
If a union is able to successfully lobby Congress to limit imports of rival products, and thus to raise the demand (and thus price) for the goods or services they make, then which of the following best describes the outcome? a. The supply of labor will increase
b. The demand for labor will increase. c. The supply of labor will decrease. d. The demand for labor will decrease.
A balanced budget is present when:
a. the economy is at full employment. b. the actual level of aggregate spending equals the planned level of spending. c. public sector spending equals private sector spending. d. government revenues equal government expenditures.