To reduce the supply of money the government could:
(a) Reduce interest rates.
(b) Buy back government bonds.
(c) Sell government bonds.
(d) Encourage banks to lend.
Answer: (c) Sell government bonds.
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Mr. Johnson earns $100,000 per year. Each year he spends $70,000 and saves $30,000. He pays 5 percent sales tax on all his spending. Assuming this is only tax he pays, his average tax rate out of his income is:
a) 5.0 percent b) 1.5 percent c) 3.5 percent d) 2.5 percent
According to the new Keynesian economists, SAS adjusts slowly to a change in AD because of
A) high menu costs. B) staggered overlapping wage contracts. C) efficiency wages. D) All of the above combinations explain slow adjustments in SAS.
Which of the following is an example of a measure of labor productivity?
A) Farm workers produce 30 bushels of wheat per worker per day. B) Autos get 30 gallons to the mile. C) The growth rate of per capita real GDP is 3.5 percent per year. D) Wages increase by 3.5 percent per year for 5 years.
If an increase in prices increases total revenue for a product in the short run, in the long run, it will: a. Increase total revenue by more
b. Increase total revenue by less. c. Decrease total revenue. d. Either b. or c. could result in the long run.