In the past 100 years, the U.S. economy has primarily experienced
A. deflation.
B. unemployment.
C. inflation.
D. depression.
Answer: C
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When the Fed reduces the money supply, it will cause a decrease in aggregate demand because:
a. real rates will rise, lowering business investment and consumer spending. b. the dollar will depreciate on the foreign exchange market, leading to an increase in net exports. c. lower interest rates will cause the value of assets (for example, stocks) to rise. d. the national debt will increase, causing consumers to reduce their spending.
Why might the government impose regulations on monopolistically competitive firms?
a. to make them less like monopolies b. to make them more like perfectly competitive firms c. to make them less like perfectly competitive firms d. to make more like non-profit organizations
The fair or flat tax suggested to make the income tax system more fair to the citizens would result in
A. decreasing the impact of automatic stabilizers. B. increasing the impact of automatic stabilizers. C. generate a larger revenue to the federal government and decrease deficits. D. not affect the effectiveness of automatic stabilizers.
The consumption schedule is drawn on the assumption that as income increases, consumption will:
A. be unaffected. B. increase absolutely but remain constant as a percentage of income. C. increase absolutely but decline as a percentage of income. D. increase both absolutely and as a percentage of income.