A policy mix of an expansionary fiscal policy and an expansionary monetary policy would cause output to ________ and interest rates to ________.
A) increase; increase
B) increase; increase, decrease, or remain unchanged
C) increase, decrease, or remain unchanged; increase
D) decrease; increase
Answer: B) increase; increase, decrease, or remain unchanged
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Which of the following pairs of variables are likely to be positively correlated?
A) Income and consumption B) Price and consumption C) Education and unemployment D) Availability of health care and death rate
Money’s principal function is to serve as a
A. standard for making loans. B. standard for credit reporting. C. medium of exchange. D. method for storing wealth.
Default risk is the risk associated with:
A. the illiquidity associated with small issues. B. the bond issuer not being able to make the promised payments. C. the effect on bond prices caused by changes in market rates of interest. D. changes in the expected inflation rate.
A decrease in the price level in Japan will shift the U.S. aggregate demand curve outward.
Answer the following statement true (T) or false (F)