When the economy is in a liquidity trap, which of the following is not correct?
A) A reduction in the interest rate can be used to increase output.
B) Fiscal policy is more important.
C) Interest rate is zero.
D) Large increases in spending and cuts in taxes were not enough to avoid the recession.
A
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Comment on the following statement: "Average fixed cost falls as output rises, but average fixed cost will never be equal to zero."
What will be an ideal response?
A large business finds it __________ than a small business to pursue secretly a high-risk investment in violation of the terms of its loan agreement, and so the large business is __________ beset by the moral hazard problem
A) more difficult; more B) more difficult; less C) easier; more D) easier; less
When the balance of trade is in balance, we know with certainty that
A) the value of all debit transactions equals the value of all credit transactions. B) the value of exports of goods equals the value of imports of goods. C) the value of capital exports equals the value of capital imports. D) the value of exports of goods and services equals the value of imports of goods and services.
Which of the following best describes a flow rather than a stock? a. You own $5,000 worth of government bonds. b. You own a $100,000 house
c. You own a coin collection valued at $10,000. d. You earn $500 per week. e. You own a $45,000 automobile.