In the monetarist model, an increase in both government spending and taxes would
a. lead to a large increase in interest rates.
b. increase income dollar for dollar with the increase in government spending.
c. have a much smaller impact on income than in the Keynesian model.
d. all of the above.
C
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For an economy starting at full employment real GDP, an increase in autonomous expenditure results in a(n)
A. increase in full-employment output. B. decrease in full-employment output. C. recessionary output gap. D. inflationary output gap.
A researcher finds that for an economy, the nominal GDP in the year 2012 equals the nominal GDP in the year 2013. He also finds that the output of the economy has been the same over the two years. A situation like this is possible only if:
A) the annual inflation rate in the economy is negative. B) the annual interest rate in the economy is negative. C) the annual interest rate in the economy is zero percent. D) the annual inflation rate in the economy is zero percent.
Foreign currency prices of the U.S. dollar are currently determined by a managed float exchange rate system
Indicate whether the statement is true or false
Indexation is designed to
A) moderate the costs of inflation, not inflation itself. B) rapidly reduce inflation. C) reduce the natural rate of unemployment. D) rapidly reduce inflationary expectations.