Monetary stimulus may be ineffective if
A. People usually respond to lower interest rates by consuming more goods and services.
B. The investment demand curve is inelastic.
C. Expectations of a boom cause the investment demand curve to shift to the right, offsetting interest rate effects that would stimulate the economy.
D. The investment demand curve is horizontal.
Answer: B
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What is the great advantage of adjudication over legislation in the management of negative externalities?
A) Adjudication has lower costs. B) Adjudication maintains the continuity of expectations. C) Courts are bound by the rule of law and legislatures are not. D) Courts can act more quickly than legislatures. E) There are no clear answers in such cases.
A debt crisis may lead to a banking crisis
Indicate whether the statement is true or false
Suppose that output in an economy is 50 units and the number of hours worked in the economy is 25. If the economy enters a recession, which of the following combinations of output and hours worked would best reflect the recession?
A. 25 units of output and 10 hours worked B. 50 units of output and 25 hours worked C. 40 units of output and 20 hours worked D. 30 units of output and 20 hours worked
Disposable personal income is equal to
a. GDP minus personal taxes. b. NI minus personal taxes. c. NI plus personal taxes. d. PI minus personal taxes.