If the United States economy is operating at peak efficiency, it is on its ___________________________.
Fill in the blank(s) with the appropriate word(s).
production possibility frontier (curve)
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An economy that experiences a rise in the price level over two consecutive quarters necessarily experiences
A) a recession. B) deflation. C) disinflation. D) none of the above.
The economy's self-correcting mechanism appears to be more efficient at curing
a. recessionary gaps by reducing price levels. b. inflationary gaps by reducing price levels. c. unemployment by reducing wage levels. d. inflationary gaps through inflation.
Suppose the velocity of money is 6, the amount of money in circulation is $600 billion, the index of prices is 180, and real GDP is $20 billion. According to the strict quantity theory of money, if the money supply decreased to $300 billion,
a. the velocity of money would rise to 12. b. the index of prices would fall to 90. c. real GDP would decrease to $10 billion. d. the velocity of money would decline to 3.
Figure 4-11 Refer to . On the Laffer curve shown, which of the following is true?
a. Tax revenue would increase if marginal tax rates were lowered from point C.
b. Tax revenue would decrease if marginal tax rates were lowered from point A.
c. Tax revenues are maximized at a tax rate corresponding to point B.
d. All of the above are true.