The recession of the early 1990s, which followed a period of sustained prosperity, can best be explained as resulting from
a. cost-push inflation
b. a decrease in aggregate demand
c. a decrease in aggregate supply
d. stagflation
e. too many speculative real estate deals
B
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In the complete algebraic formulation of ISLM,
A) the government spending multiplier is greater than the tax mulitplier as long as b <1. B) the government spending mulitplier is less than the tax multiplier as long as b<1. C) monetary policy is always more powerful than fiscal policy. D) fiscal policy is always more powerful than monetary policy.
The amount of unemployment that arises because workers are temporarily between jobs or new entrants to the labor force is known as
a. structural unemployment. b. cyclical unemployment. c. frictional unemployment. d. induced unemployment.
Suppose the nominal interest rate is 10 percent, the tax rate on interest income is 28 percent, and the inflation rate is 6 percent. Then the after-tax real interest rate is -3.2 percent
a. True b. False Indicate whether the statement is true or false
Which of the following is NOT correct concerning perfectly competitive firms in the long run?
A) Long-run economic profits are zero. B) Price equals minimum long-run average cost. C) Entrepreneurs earn the opportunity cost of their investment. D) The opportunity cost of capital is zero.