When the economy is far below the natural rate of real output, efforts to change inflation with monetary policy will be ____ successful and efforts to stimulate the economy will be ____ successful
a. More; less
b. More; more
c. Less; less
d. Less; more
d
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Private solutions to externalities are most effective if ________
A) transaction costs associated with bargaining are low B) transaction costs associated with bargaining are high C) property rights are not defined clearly D) a large number of people are affected by the externalities
Trade diversion results in
A) an increase in the total amount of trade in the world. B) a decrease in the total amount of trade in the world. C) no change in the total amount of trade in the world. D) either an increase or decrease in the amount of trade in the world, depending on where trade takes place.
In 2009, output was beneath potential. At the same time, the budget deficit hit a record high of over $1 trillion. If President Obama were to have pursued budget cuts, given the state of the economy, these spending cuts would have:
A. been procyclical. B. increased interest rates. C. crowded out investment. D. been countercyclical.
Refer to the World View article titled "North Korea's Food Shortage Grows." If North Korea reduces the size of its military and produces more food, this is most consistent with
A. A laissez faire policy. B. A movement along the economy's production possibilities curve. C. Privatization. D. The law of increasing opportunity costs.