Supply-side economics is the school of thought that advocates the use of
A) monetary policy to stimulate long-run aggregate supply.
B) fiscal policy to stimulate long-run aggregate demand.
C) monetary policy to stimulate short-run aggregate demand.
D) fiscal policy to stimulate long-run aggregate supply.
Answer: D) fiscal policy to stimulate long-run aggregate supply.
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Jobs that require more costly training generally have
a. higher wages b. lower employment levels c. less human capital required d. higher personal risk levels e. lower wages
Describe the Keynesian transmission mechanism for a decrease in the money supply. Assuming that no liquidity trap exists, that investment is interest-sensitive, and that the economy is in the horizontal portion of the AS curve, what happens to Real GDP and the price level? How can you tell if this is a direct transmission mechanism or an indirect one?
A given income-expenditure diagram always assumes a variable price level.
Answer the following statement true (T) or false (F)
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher