According to the Austrian view of the business cycle, expansionary monetary policy that pushes the interest rate to an artificially low level will
a. lead to an increase in long-term investments like houses and office buildings without generating the savings that will be required for their purchase in the future.
b. lead to a reduction in long-term investments like houses and office buildings that will quickly throw the economy into a recession.
c. lead to an increase in long-term investments like houses and office buildings that will enhance the long-term growth of the economy.
d. lead to a reduction in investment, but there will be no impact on output, employment or the general level of prices.
A
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Writing total output as Q, change in output as ?Q, total labor employment as L, and change in labor employment as ?L, the marginal product of labor can be written algebraically as
A) ?Q ? L. B) Q / L. C) ?L / ?Q. D) ?Q / ?L.
The U.S. trade deficit has been mainly caused by:
A. cheap labor in other countries. B. a low rate of national saving. C. unfair trade restrictions imposed by other countries on imports. D. production of inferior goods in the U.S.
In communities where more people carry property insurance you would expect people to be:
A. less careful about securing their possessions. B. more careful about securing their possessions. C. less likely to engage in behaviors that would be classified as moral hazard. D. paying less for property insurance relative to communities where fewer people carry property insurance.