The economy is in a recessionary gap and a Keynesian economist advocates expansionary fiscal policy. What is a likely reason this economist advocates expansionary fiscal policy?
A) The economist believes the economy is stuck in a recessionary gap and crowding out will be complete.
B) The economist believes the economy is stuck in a recessionary gap and there will be no crowding out.
C) The economist believes that wages are too flexible and that crowding out will be incomplete.
D) The economist believes the AD curve is downward-sloping, the SRAS curve is upward-sloping, and prices are flexible.
E) none of the above
B
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Which of the following is most likely to increase an individual's future spending?
A) Paying back a loan in the future B) Borrowing money today C) Depositing money in the future D) Withdrawing money in the future
Refer to Figure 5-3. If consumers paid the full price of medical services, the price they would pay is
A) $40. B) $55. C) $65. D) > $65.
Assume that the M1 multiplier is 4. If the Federal Reserve purchases $200 worth of government securities, the money supply will
A) rise by $200. B) rise by $800. C) fall by $200. D) fall by $800.
If the economy is operating on the relatively vertical segment of the aggregate supply curve, an increase in aggregate demand causes a ________ change in the price level and a ________ change in output.
A. big; big B. big; small C. small; big D. small; small