The potential conflict of economic policy with political objectives can be used to explain
A. The ups and downs in overall business activity.
B. The election of the Federal Reserve's Board of Governors.
C. Illegal behavior on the part of politicians and economists.
D. Why politicians stimulate the economy before an election and restrict it afterward.
Answer: D
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The deposit expansion multiplier would decrease if the Fed were to
A) raise the required reserve ratio. B) lower the required reserve ratio. C) lower the discount rate. D) buy bonds.
________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production
A) Competition B) A centrally planned economy C) Equity D) Voluntary exchange
In financial markets, leverage refers to:
A) the use of borrowed money in an investment B) the power to influence the market C) the use of political connections in attaining financial outcomes D) the role that speculators have in impacting market outcomes
Refer to Figure 7.1. At output level Q2
A) average fixed cost is increasing. B) average variable cost equals average fixed cost. C) marginal cost is negative. D) average total cost is negative. E) none of the above