Rapid economic growth, stable prices and __________ are the three important macroeconomic goals about which most economists agree
a. an unemployment rate of zero
b. zero inflation
c. full employment
d. a high exchange rate
e. low interest rates
C
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When investment increases, the ________ in aggregate demand is ________ the change in investment
A) increase; the same as B) increase; greater than C) decrease; greater than D) decrease; the same as E) increase; smaller than
Employees at La Dola Inc often engaged in hasty decision making that resulted in losses for the company. Because employees were not individually accountable for their decisions, this trend continued
However, when the company introduced a policy of profit-sharing with its employees, they began scrutinizing their decisions carefully before implementing. Explain the reason behind the change in the employees' behavior.
Housing prices in the United States fell sharply in 2007 and 2008, contributing to a severe recession as the AD curve shifted leftward. The ordinary AS/AD model would predict that falling short-run aggregate supply would bring deflation and move the economy back to potential output. Which of the following describes the impact of dynamic feedback effects on this return to potential output?
A. Falling house prices could cause people to buy more houses than they really need, creating a further crisis as another wave of foreclosures and bankruptcies occurs. B. The deflation will be counteracted by increases in the money supply from the Federal Reserve, preventing the price adjustment and keeping the economy below potential output. C. Expectations that prices might fall further could cause people to reduce spending, shifting the AD curve further to the left. D. As the SAS curve shifts downward, firms respond by increasing their investment in capital equipment, but only rehired a few of the laid-off workers, therefore, employment did not return to normal.
Which of the following is NOT a criticism that has been leveled at the World Bank?
A. Despite receiving loans from the World Bank, economic growth in many client nations has been disappointing. B. Too many loans go to nations capable of privately financing their projects. C. Some countries receiving World Bank loans are net lenders of funds to other nations and so should not be receiving World Bank funds. D. Since 1990, the World Bank has loaned mostly to African countries, to the detriment of nations in other parts of the world.