The contemporary consensus with regard to stabilization policy is that
A. fiscal policy is, for now, the “only game in town.”
B. fiscal policy is more effective than monetary policy.
C. monetary policy is, for now, the “only game in town.”
D. monetary policy is slightly more effective than fiscal policy.
Answer: C
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Firms choose the highest production indifference curve they can obtain given the lowest possible budget line.
Answer the following statement true (T) or false (F)
A reduction in world oil supplies is likely to cause
A) an increase in aggregate demand and a decrease in the equilibrium price level. B) a decrease in equilibrium price level and an increase in real Gross Domestic Product (GDP). C) an increase in equilibrium price level and an increase in real Gross Domestic Product (GDP). D) a reduction in aggregate supply, a rise in the equilibrium price level, and a fall in real Gross Domestic Product (GDP).
Marxists and leaders of communist economies actually often admire the market mechanism for its
a. efficiency in allocation of resources. b. fairness in distribution of output. c. maximization of net benefits for consumers. d. effectiveness in achieving high rates of growth.
An expansionary monetary policy is most likely to:
A. decreases interest rates, reduces investment, and decreases income. B. decreases interest rates, raises investment, and increases income. C. increases interest rates, raises investment, and increases income. D. increases interest rates, reduces investment, and decreases income.