If Japan experiences a period of deflation and the United States does not, what will happen in the United States?
A. An increase in aggregate supply
B. A decrease in aggregate supply
C. A decrease in aggregate demand
D. An increase in aggregate demand
Answer: C
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If aggregate spending in an economy can be written as Y = 15,000 + 0.6Y - 20,000r, and potential output equals 34,000, what real interest rate must the Federal Reserve set to bring the economy to full employment?
A. 5 percent B. 7 percent C. 3 percent D. 6 percent
In the United States, the individual income tax is best described as a
a. regressive tax b. proportional tax c. flat tax d. progressive tax e. repressive tax
When a strategy is the best one to follow no matter what strategy other players choose, it is called a:
A. dominated strategy. B. golden decision. C. zero-sum strategy. D. dominant strategy.
Patricia's nominal annual income in 2009 was $60,000. If the rate of inflation is constant at 10 percent, in order to keep Patricia's real income constant, her nominal income in the year 2010 should be:
A. $60,000. B. $54,000. C. $66,000. D. $70,000.