The effect time lag is the time period that elapses
A. between when an economic problem manifests itself and it is officially acknowledged.
B. between the recognition of an economic problem and implementing policies to solve it.
C. between implementing policies to solve an economic problem and when the results of that policy can be measured.
D. between the beginning of the budgetary process and the final budget resolution.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
The way that a society uses to allocate resources to satisfy human wants is called
A) an economic system. B) an assumption. C) realism. D) a physical science.
Suppose the following: (1 ) the wage rate falls, (2 ) business taxes decline, (3 ) any change in SRAS is greater than any change in AD. Based on this information, in the short run Real GDP will __________ and the price level will __________
A) rise; rise B) fall; rise C) fall; fall D) rise; fall E) none of the above
If the Federal Reserve wanted to change the money supply in the economy, it would be least likely to
A) change the federal funds rate. B) sell bonds on the open market. C) change the level of reserves required to be held by banks. D) buy bonds on the open market.