An alternative to maintaining an undervalued currency is to ________ the fundamental value of the exchange rate by ________ monetary policy.
A. decrease; tightening
B. decrease; easing
C. increase; tightening
D. increase; easing
Answer: B
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During a recession, automatic stabilization causes the government budget deficit to
A) fall. B) increase. C) remain stable. D) move in the same direction as Y.
Which of the following is an employer mandate in the new the federal government's new national health care program?
A) Under the new program, the federal government will coordinate the establishment of health insurance exchanges. B) A tax rate of 3.8 percent will be assessed on nearly all earnings above $200,000 per year for individuals and above $250,000 per year for married couples. C) Firms with at least 50 employees must either provide health insurance or pay fines when uninsured employees receive tax subsidies to purchase insurance. D) Nearly all U.S. residents must either purchase health insurance coverage or pay a fine of up to $750 per year for an individual (up to $2,250 per year for a family).
Friedman and Phelps argued that
a. if peoples' inflation expectations were fixed, then an increase in the money supply growth rate could not change output in the short or long run. b. if peoples' inflation expectations were fixed, then a decrease in the money supply growth rate could raise output and unemployment in the short run. c. any change in unemployment created by making aggregate demand increase more rapidly is temporary because people eventually revise their inflation expectations. d. None of the above is correct.
When the inflationary gap is finally eliminated, a long-run equilibrium is established with a ____ price level and with GDP ____ potential GDP.
A. higher; equal to B. higher; greater than C. lower; equal to D. lower; greater than