Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A. a change in society's preferences for hybrid cars versus motorcycles.
B. an increase in economic growth.
C. an increase in unemployment.
D. a reduction in unemployment.
Answer: A
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The "key ingredient" in ending a hyperinflation is to
A) allow the money supply to grow more rapidly. B) reduce the enormous budget deficit. C) require wage contracts to be indexed more frequently. D) devalue the nation's currency in the foreign exchange market.
One of the consequences of the overstatement of the CPI is that
A. Social Security taxes are lower than they would otherwise be. B. the poverty line is lower than it would otherwise be. C. personal income taxes are lower than they would otherwise be. D. Social Security payments are lower than they would otherwise be.
In the recession of 2008-2009, the unemployment rate rose to over 10 percent.
Answer the following statement true (T) or false (F)
If there is a constitutional requirement to maintain a balanced budget, then during a recession when tax revenues are shrinking, the government will have to implement:
A. Contractionary fiscal policy B. No change in fiscal policy C. Expansionary fiscal policy D. Countercyclical fiscal policy