Which of the following statements best describes a comparison between Keynesian and neoclassical models?
a. Neoclassical economics tends to view deflation as a price that might sometimes be paid for lower unemployment; Keynesian economics tends to view deflation as a cost that offers no offsetting gains in terms of lower unemployment.
b. Keynesian economics tends to view deflation as a price that might sometimes be paid for lower unemployment; neoclassical economics tends to view deflation as a cost that offers no offsetting gains in terms of lower unemployment.
c. Neoclassical economics tends to view inflation as a price that might sometimes be paid for lower unemployment; Keynesian economics tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment.
d. Keynesian economics tends to view inflation as a price that might sometimes be paid for lower unemployment; neoclassical economics tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment.
d. Keynesian economics tends to view inflation as a price that might sometimes be paid for lower unemployment; neoclassical economics tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment.
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
A vocal minority of economists, believers in the theory of rational expectations, insist that
A. the Phillips curve is downward sloping even in the short run. B. the Phillips curve is vertical even in the short run. C. a trade-off exists between inflation and unemployment even in the long run. D. expansionary fiscal and monetary policy can reduce unemployment without creating inflation.
If the APC is .6, we consume
A. 4 percent of our income. B. 6 percent of our income. C. 40 percent of our income. D. 60 percent of our income.
Which is the most accurate statement?
A. We have never had corporate corruption until around the year 2000. B. If you asked the average American if he believed all corporate officers were honest, he would answer "Yes." C. Enron is the only large corporation that was caught up in a financial scandal since the 1980s. D. Although it may be years before we know the full damages incurred, it seems very likely that the corporate financial scandals of recent years will end up costing those corporations and the public billions of dollars.