During the financial crisis of 2007–2009, both fiscal and monetary policy turned more expansionary.
Answer the following statement true (T) or false (F)
True
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"All available information" in the definition of rational expectations means that
a. agents use all possible information that could be out there. b. agents use all possible public information that could be out there. c. agents use all information that is relevant. d. agents use all information that is available in which the marginal benefits of the information are greater than the marginal costs of gathering the information.
Which of the following is correct? Gross private domestic investment:
a. Includes goods that are produced but not consumed. b. Is always greater than Personal Consumption Expenditures. c. Includes stock and bonds. d. All of the above are correct.
During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is
a. above the natural rate, so real GDP growth was likely low. b. above the natural rate, so real GDP growth was likely high. c. below the natural rate, so real GDP growth was likely low. d. below the natural rate, so real GDP growth was likely high.
Answer the following statement(s) true (T) or false (F)
1.The multiplier effect causes the ultimate increase in total purchases to be greater than the initial increase. 2.The marginal propensity to consume is the fraction of additional disposable income that a household consumes rather than saves. 3.The 2008–2009 recession was the mildest recession since the Great Depression. 4.Since the 1930s, economic stabilization policies have focused primarily on the supply side of the economy. 5.Economist Arthur Laffer invented a graphic demonstrating the effect of tax rates on government revenue.