Advocates for a structural solution to the Great Recession argued that:
A. government should cut taxes across the board to stimulate demand for goods and
services.
B. firms should be allowed to go bankrupt, allowing the economy to correct for resource
misallocations.
C. firms in financial distress should be taken over by the government and run for the public
good.
D. massive public works projects should be implemented to produce public capital, keep
people employed, and help workers maintain job skills.
Answer: B
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Which of the following would reduce the money multiplier?
A) bank reductions in desired reserve holdings B) reducing the reserve ratio C) cash drains from banks D) bond purchases by the Fed
What is the relationship between unemployment and the price level in the short run?
What will be an ideal response?
In a perfectly competitive resource market the Marginal Revenue Product Curve is
A) vertical. B) horizontal. C) downward-sloping. D) upward-sloping.
Refer to Scenario 10.1. How much output will Barbara produce?
A) 0 B) 22 C) 56 D) 72 E) none of the above