Consider an economy with flexible exchange rates. If there are high levels of inflation in the economy, then the appropriate monetary policy would be to ________ the money supply, which will cause the ______ curve to shift ________.
A) increase; the LM; left
B) decrease; the LM; right
C) decrease; the LM; left
D) increase; the IS; left
Answer: C) decrease; the LM; left
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Full employment occurs
A) only if the unemployment rate is zero. B) only if the unemployment rate is equal to the natural unemployment rate. C) only if unemployment is equal to structural unemployment plus cyclical unemployment. D) None of the above answers are correct.
Product variety and information for consumers are gains from
A) perfect competition. B) monopolistic competition. C) monopoly. D) oligopoly.
Congress passed the Freedom to Farm Act in 1996. What was the purpose of this Act?
A) to encourage more people to become farmers B) to phase out the use of price ceilings in agricultural markets C) to phase out price floors and return to a free market in agriculture D) to grant free land to farmers in order to produce crops that were particularly scarce
As the economy nears the end of an expansion, which of the following do we typically see?
A) falling wages relative to output prices B) rising interest rates C) rising firm profits D) rising levels of firm investment