Economists believed that the U.S. economy had a (n) ____ in 2006 and 2007.
A. mild recession
B. small recessionary gap
C. small inflationary gap
D. deflationary gap
Answer: C
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Rational expectations theory suggests that short-run stabilization policy
A) is best achieved with monetary policy. B) is best achieved with fiscal policy. C) is equally easy to achieve with monetary or fiscal policy. D) should not be attempted.
Prices communicate information about relative availability of products. For example, a decrease in the price of corn signals to consumers and producers that: a. consumers are buying more corn than before
b. corn is relatively more abundant than before. c. corn is relatively less abundant than before. d. consumers are stocking up on corn because of the predictions of a cold winter.
The main attractive feature of a negative income tax program is
a. it is politically clean and simple b. it keeps the IRS out of the picture c. it avoids cash payments to the poor d. it is totally financed out of the incomes of the poor creating for them a sense of individual responsibility e. it only subsidizes the unemployed
As a general rule, marginal utility will be less:
A. as less of the good is consumed. B. as more of the good is consumed. C. when average utility is at a maximum. D. only when the good is inferior.