The laissez-faire approach popular before the Great Depression influenced the U.S. government to see business downturns as:
a. natural phases in an otherwise healthy system and to therefore take short-term deficit spending measures to help recovery.
b. natural phases in an otherwise healthy system and to therefore wait for recovery to occur naturally
c. serious maladies in an otherwise healthy system and to therefore work to redesign the system to avoid such failure in the future.
d. failures of the type of system Adam Smith envisaged and to therefore work to move toward an open economy with free trade.
e. failures of the system to achieve the form that Adam Smith envisaged and to therefore work to decrease government interference at the micro level.
b
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In an economy where aggregate spending is given by Y = 3,000 + .75Y - 10,000 r, the central bank is currently setting the interest rate at 0.05 (5 percent). If potential output equals 10,800, the central bank must ________ the interest rate to close the ________ gap.
A. lower; recessionary B. raise; recessionary C. raise; expansionary D. lower; expansionary
Equilibrium in the market is where supply is equal to demand.
A. True B. False C. Uncertain
Members of IGA are advised by that organization to
A. hire less-qualified people to keep costs down. B. provide a level of service, community involvement, and types of goods Walmart does not. C. "out Walmart" Walmart by lowering prices. D. sell exactly the same goods Walmart does.
As the multiplier process is working on the demand side,
A. firms will meet the additional demand without raising prices. B. firms will meet the additional demand only by raising prices. C. firms will not meet the additional demand. D. the multiplier process will cease creating demand.