In the basic Keynesian model, a decrease in government purchases:
A. increases short-run equilibrium output.
B. increases potential output.
C. reduces potential output.
D. reduces short-run equilibrium output.
Answer: D
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The rational expectations hypothesis implies that when macroeconomic policy changes
A) the economy will become highly unstable. B) the way expectations are formed will change. C) people will be slow to catch on to the change. D) people will make systematic mistakes.
Consider the two graphs above. Suppose that firms are able to use inventories as collateral for low-interest loans. This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
An excess demand for foreign currency at current exchange rates is known as a
A. Balance-of-payments surplus. B. Trade surplus. C. Trade deficit. D. Balance-of-payments deficit.
Discrimination can come from many groups of people, including employers and fellow employees.
Answer the following statement true (T) or false (F)