Most economists would agree with which statement about fiscal policy?
A. It's useful when few resources are unemployed due to an aggregate demand shock.
B. It's useful when a lot of resources are unemployed due to a real shock.
C. It's useful when few resources are unemployed due to a real shock.
D. It's useful when a lot of resources are unemployed due to an aggregate demand shock.
Answer: D. It's useful when a lot of resources are unemployed due to an aggregate demand shock.
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An increase in real interest rates in the United States
a. discourages both U.S. and foreign residents from buying U.S. assets. b. encourages both U.S. and foreign residents to buy U.S. assets. c. encourages U.S. residents to buy U.S. assets, but discourages foreign residents from buying U.S. assets. d. encourages foreign residents to buy U.S. assets, but discourages U.S. residents from buying U.S. assets.
The economy is in the horizontal portion of the AS curve, there is a liquidity trap, and investment spending is sensitive to changes in the interest rate. According to the Keynesian transmission mechanism, if the money supply increases the interest rate __________, investment spending __________, the AD curve __________ and the price level __________
A) falls; rises; shifts to the right; rises B) falls; rises; shifts to the right; remains unchanged C) does not change; does not change; does not change; does not change D) does not change; shifts to the left; does not change; rises E) rises; falls; left; falls
If virtual reality headsets are considered substitutes for game consoles, then a decline in the price of game consoles would, all else equal
A) increase the demand for virtual reality headsets. B) decrease the demand for virtual reality headsets. C) increase the quantity of virtual reality headsets demanded. D) decrease the quantity of virtual reality headsets demanded.
The appropriations process is
A. seldom smooth, especially when different parties control Congress and the White House. B. characterized by brief and dignified budget debates. C. always smooth, regardless of the political landscape. D. always rough, especially when the same political party controls both Congress and the White House.