The basic purpose of financial markets is:
A. sell commodities to firms as inputs.
B. match people who want money to spend now with people who want to save their money for later.
C. buy commodities from firms and the government to sell to the public.
D. buy and sell different currencies in order to make a profit.
Answer: B
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The long-run Phillips curve indicates that
A) potential GDP can never be achieved. B) there is no way to control the inflation rate in the long run. C) any inflation rate is possible at the natural unemployment rate. D) any unemployment rate is possible at the natural inflation rate. E) there is a tradeoff between the inflation rate and the unemployment rate in the long-run.
A negative externality such as pollution can be corrected by
A) a subsidy to producers. B) a tax on producers. C) a subsidy to consumers. D) a stimulus to production.
How does the expenditure multiplier change when investment spending increases?
a. It increases. b. It decreases. c. It does not change. d. It briefly increase before returning to equilibrium.
Borrowing from other countries can lead to economic growth
Indicate whether the statement is true or false