The financial sector is very important to the economy.
Answer the following statement true (T) or false (F)
True
As long as the financial sector is running smoothly, we tend to forget it is there. But, if it breaks down, like it did in 2008, the economy can be disrupted. The financial sector has two roles-to facilitate trade and to transfer savings back into spending.
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Suppose the economy is initially in equilibrium where real GDP equals potential GDP and the inflation rate is at the target rate
Other things equal, a housing boom will cause aggregate expenditures to increase, which will result in a new, short-run equilibrium. To return GDP to its potential level, the inflation rate will adjust. With adaptive expectations, this will result in A) an increase in aggregate demand and an increase in the inflation rate. B) a decrease in aggregate supply and an increase in the inflation rate. C) a decrease in aggregate demand and a decrease in the inflation rate. D) an increase in aggregate supply and a decrease in the inflation rate.
If actual output exceeds potential output for a prolonged period of time, we would eventually expect factor prices to:
A. fall, causing the LAS curve to shift in to the left. B. fall, causing the SAS curve to shift down (to the right). C. rise, causing the SAS curve to shift up (to the left). D. rise, causing the LAS curve to shift out to the right.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A. B to A. B. A to C. C. C to D. D. B to D.
Provide a concise statement on the relationship between the debt crisis and:
(a) foreign direct investment, (b) trade liberalization, (c) absolute poverty, and (d) investment levels.