To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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A price floor set above the equilibrium price
A) creates a surplus. B) creates a shortage. C) creates excess demand. D) balances supply and demand. E) has no effect.
On the graph above, suppose the economy is at point 6. Which sequence of points best illustrates the short-run and then long-run impacts of an "expansionary fiscal contraction"?
A) 2, 7, 8 B) 4, 7, 1 C) 1, 4, 5 D) 1, 4, 2
Economics is
a. the narrow study of how to make money in financial markets b. the broad study of how to allocate unlimited resources to satisfy limited uses c. the broad study of how to allocate limited resources to satisfy unlimited wants d. the narrow study of using stocks and bonds to their maximum potential e. the narrow study of how to be conservative in financial affairs
According to the definitions of national saving and public saving, if Y, C, and G remained the same, an increase in taxes would
a. raise national saving and public saving. b. raise national saving and raise public saving. c. leave national saving and public saving unchanged. d. leave national saving unchanged and raise public saving.