According to new classical economists, when monetary and fiscal policies are __________ anticipated, people form their expectations __________, and wages and prices are __________, the policy ineffectiveness proposition (PIP) results
A) correctly; adaptively; inflexible
B) correctly; rationally; flexible
C) incorrectly; adaptively; inflexible
D) incorrectly; rationally; flexible
E) correctly; rationally; inflexible
B
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Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 120 sliders and 100 hot wings would appear
A) along Dina's production possibilities frontier. B) inside Dina's production possibilities frontier. C) outside Dina's production possibilities frontier. D) at the vertical intercept of Dina's production possibilities frontier.
The worldwide slowdown in labor productivity began in the early
a. 1960s. b. 1970s. c. 1980s. d. 1990s.
If a newspaper reporter wanted to learn about changes in the U.S. price levels, she would probably get that information by looking at the
a. real gross domestic product b. consumer price index c. latest press release from the Council of Economic Indicators d. nominal gross domestic product e. gross national product
The monetarists believe that an increase in the money supply of about 4% per year, regardless of economic conditions, is a good monetary policy. Why was 4% chosen?
A. It reflects the fact that the output of the economy has been growing at about 3 to 4% per year, and a 4% increase in the money supply would tend to stabilize the price level. B. By equating the money supply growth rate and the unemployment rate, the monetarists believe that the output of the economy will increase. C. By restricting the increase in money supply to 4%, the monetarists hope to limit fluctuations in the price trend to 4% and stabilize velocity. D. Price fluctuations have been shown to be historically more than 4%. By a steady 4% increase in the money supply, the monetarists hope to drive prices down.