When inflation and unemployment are both higher than desired, most economists believe that the government should:
A. adopt contractionary monetary policies that reduce both inflation and unemployment.
B. adopt expansionary fiscal policies that reduce both inflation and unemployment.
C. not act as it is impossible to reduce either inflation or unemployment under these circumstances.
D. determine whether reducing inflation is more or less important than reducing unemployment and adopt a policy that targets the more important goal.
Answer: D
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Neoclassical growth theory predicts that China's economic growth rate will ________
A) decrease when the interest rate increases B) continue at around 10 percent a year C) always remain above the U.S. economic growth rate D) eventually converge to the U.S. economic growth rate
Social Security expenditures in the U.S. for 2006 made up approximately what percent of GDP?
a. 5 percent b. 12 percent c. 50 percent d. 75 percent e. 1 percent
The seller of an existing house claims that it is in great shape, and he is offering a 2-year warranty on the house. His statements about the quality of his house are likely to be:
A. overstated. B. true because offering a warranty is a costly-to-fake signal. C. credible even in the absence of a warranty. D. untrue because otherwise he would not offer the warranty.
Because the behavioral economics approach suggests many alternative behaviors that people might exhibit if they fail to behave as if they are rational, this approach
A. reproduces the same predictions as utility analysis. B. often fails to provide clearly testable behavioral predictions. C. has an over reliance on the rationality assumption. D. ignores the possibility of bounded rationality.