The claim that reducing deficits in an economy with high rates of unemployment will help even in the short run by improving confidence is called:
A) quantitative easing.
B) fiscal stimulus.
C) expansionary austerity.
D) a credit crunch.
Answer: C) expansionary austerity.
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Under what circumstances would government loan guarantees be socially beneficial?
A. When the guarantees socialize losses and privatize gains. B. When the guarantees stimulate production of goods generating significant spillover costs. C. When the guarantees promote production of goods otherwise underproduced by the private sector. D. When the guarantees increase company profits.
In the United States, which factor of production earns the largest share of the nation's total income?
What will be an ideal response?
Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will
i. repeatedly shift the aggregate demand curve rightward and raise the price level. ii. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices. iii. result initially in lower employment and a higher price level. A) i only B) both i and ii C) iii only D) both ii and iii E) i and iii
A tax on interest income could be efficient even if it leads to a decrease in savings.
Answer the following statement true (T) or false (F)