Many economists argue that government price indexes overstate inflation by 1 to 2 percent. From the point of view of those designing economic policy, this is an example of
A. An implementation problem.
B. A design problem.
C. A measurement problem.
D. A goal conflict.
Answer: C
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When actual output equals potential output and the inflation rate is stable, the economy is said to be in ________ equilibrium.
A. contractionary B. short-run C. expansionary D. long-run
What is production technology?
What will be an ideal response?
The money demand curve, against possible levels of interest rates, has a
A) negative slope. B) zero slope. C) positive slope. D) positive slope for low levels of money demand, and a negative slope for high levels of money demand.
According to classical economists, in recessions, the government should
A) stimulate the economy to increase demand. B) actively use fiscal policy to combat the recession. C) increase the minimum wage so that poor people will be able to afford necessities. D) eliminate barriers to labor market adjustment, such as burdensome regulations on businesses.