An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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Greg’s Restaurant specializes in cheeseburger and produces about 2,000 burgers daily. Greg’s rent went up by 15 percent over last year. This will result in
A. a shift up of Greg’s marginal cost curve, but no other curves will shift up. B. a shift up of both Greg’s marginal cost and average total cost. C. a shift up of the marginal cost, average variable cost, and average total cost curve. D. a shift up of only Greg’s average total cost curve.
The natural rate of unemployment: a. is the sum of both frictional and structural unemployment when they are at a maximum. b. includes only frictional unemployment
c. includes only structural unemployment. d. includes only cyclical unemployment.
Discretionary fiscal policy is so named because it:
A. is undertaken at the option of the nation's central bank. B. occurs automatically as the nation's level of GDP changes. C. involves specific changes in T and G undertaken expressly for stabilization at the option of Congress. D. is invoked secretly by the Council of Economic Advisers.
The so-called Euro Zone refers to:
A. All members of the European Union B. The EU nations that have adopted a common currency C. The combined Eastern and Western Europe D. Nations in Europe where the U.S. has military bases