If you are concerned that the inflation rate is too high, which of the following policies would you recommend?
A) a decrease in the money supply
B) an increase in the money supply
C) a decrease in income tax rates
D) an increase in government spending
Ans: A) a decrease in the money supply
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A firm faces competitive markets for its inputs and its output. At the profit maximizing level of output, its marginal cost is $10 and the wage paid is $2. If the MPL = L-0.5, how many workers will be hired by the firm?
A) 35 B) 40 C) 25 D) 5
The foreign exchange rate describes the
A) balance of trade. B) balance of payments. C) law of comparative advantage. D) price of foreign currency in terms of domestic currency.
When the U.S. experiences economic growth, the poverty rate will:
A. fall, because growth has benefited everyone. B. increase, because growth typically only benefits the richest 1 percent. C. fall, because growth typically helps the poor more than the wealthy. D. increase, because growth has benefited the wealthy more than the poor.
In the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP, then GDP decreases
a. True b. False Indicate whether the statement is true or false