If the marginal propensity to consume (MPC) is 0.60, what is the spending multiplier?
A. 0.4.
B. 0.6.
C. 2.5.
D. 6.0.
Answer: C
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Of these policies, which is the best example of constrained discretion?
A) the annual federal budget deficit shall not exceed three percent of the GDP B) the growth rate of the money supply shall be between two percent and five percent C) macroeconomic policies shall promote rapid economic growth and low inflation D) macroeconomic policies shall aim to keep inflation — on average over each five-year interval — within a range of two percent to four percent
In the United States, the Phillips curve is not stable in that
A) the intercept of the Phillips curve changes over time, but the slope does not change. B) the intercept and slope of the observed Phillips curve change over time. C) the slope of the Phillips curve changes, but its intercept does not change. D) it changes from a curve to a circle.
If the U.S. interest rate is 4% per year and the U.K. interest rate is 9% per year, which of the following statements is TRUE?
a. The dollar will depreciate 4% in one year. b. The pound will depreciate 9% in one year. c. The pound will appreciate 5% in one year. d. The dollar will appreciate 4% in one year.
In the self-correcting AD-AS model, the economy's short-run equilibrium position is indicated by the intersection of which two curves?
A. short-run aggregate supply and long-run aggregate supply B. short-run aggregate supply and aggregate demand C. long-run aggregate supply and aggregate demand D. long-run aggregate demand and short-run personal consumption expenditures curve