According to New Keynesian theory, fluctuations in the target interest rate are not a good explanation of the business cycle because the model predicts that
A) consumption is constant.
B) labor is countercyclical.
C) average labor productivity is countercyclical.
D) output is countercyclical.
C
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Which of the following terms describes the situation in which all resources are able to move to to highest-valued uses via voluntary exchange?
A) government intervention B) a market failure C) economic efficiency D) an externality
Which of the following is most likely to reduce the supply of labor?
A. An increase in population B. A decrease in labor productivity C. An increase in the value placed on leisure by workers D. A decrease in the value placed on leisure by workers
Exhibit 5-8 GDP data (billions of dollars) Personal consumption expenditures$850 Interest90 Corporate profits150 Government spending400 Depreciation100 Rental income70 Gross private domestic investment120 Compensation of employees830 Exports120 Imports70 Indirect business taxes80 Proprietors' income120 Personal income taxes110 Social Security taxes50 Transfer payments160 In Exhibit 5-8, personal income (PI) equals:
A. $1,280 billion. B. $2,290 billion. C. $1,310 billion. D. $2,320 billion.
Recall the Application about the decrease in taxes on cigarettes in several Canadian provinces in 1994 to answer the following question(s). Recall the Application. The change in demand for cigarettes resulting from the decrease in taxes would normally create, ceteris paribus:
A. an increase in their supply. B. a decrease in their supply. C. an increase in their quantity supplied. D. a decrease in their quantity supplied.