Provided that firms have sufficient capital and labor to support an output increase, monetary and fiscal policy are likely to be the most effective when
A. prices and inventory stocks are both high.
B. output is low and inventory stocks are low.
C. output is low and inventory stocks are high.
D. output and inventory stocks are both high.
Answer: B
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The theory underlying demand and supply curves assumes that, all other things unchanged, the primary variable that assures the equality of the quantities demanded and supplied is:
A) consumer income. B) the preferences of consumers. C) the expectations of consumers and producers. D) price.
People tend to hold more money as
A. the price level rises and interest rates rise. B. the price level falls and interest rates fall. C. the price level rises and interest rates fall. D. the price level falls and interest rates rise.
The creation of the Federal Reserve in 1913:
A. guaranteed the Federal Reserve would always act as lender of last resort. B. provided the opportunity for lender of last resort but not the guarantee that it would be used. C. eliminated bank panics in the U.S. D. was in response to the Great Depression in the U.S.
A sharp rise in the real value of stock prices, which is independent of a change in the price level, would best be an example of ________.
A. a change in the degree of excess capacity B. a change in real value of consumer wealth C. the interest-rate effect D. the real-balances effect