A reflationary (expansionist) fiscal policy could include:
a) Lower interest rates
b) Increased lending by the banks
c) An increase in corporation tax
d) An increase in discretionary government spending
Answer: d) An increase in discretionary government spendin
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The United States abandoned the Bretton Woods system of exchange rates in
A) the 1920s. B) the 1940s. C) the 1970s. D) the 1990s.
If workers and firms have rational expectations, they understand that ________ monetary policy will raise the inflation rate, so actual inflation ________ expected inflation
A) contractionary; will be equal to B) contractionary; will be less than C) expansionary; will be greater than D) expansionary; will be equal to E) expansionary; will be less than
An increase in the wage rate will have a greater effect on average costs:
a. the larger the proportion labor costs are of total costs and the easier it is to substitute capital for labor. b. the larger the proportion labor costs are of total costs and the harder it is to substitute capital for labor. c. the greater is the diminishing marginal product of labor. d. the greater are returns to scale.
Ceteris paribus means
A) all men are created equal. B) wage parity between men and women is a worthy goal. C) there are an infinite number of factors affecting each human decision and they change all the time. D) economists isolate one or two factors that change when analyzing human decisions.