To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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Helga owns Viking, Inc., started with her $100,000 inheritance. Helga’s accountant informs her that her firm earned a profit of $100,000 last year, and that if she chooses to invest the money she can expect a 10 percent return. If Helga did not run Viking, she would not work. What were Helga’s economic profits last year?
A. Zero B. $100,000 C. $90,000 D. $95,000
Securitization is the process of
A) issuing stocks to finance capital spending. B) issuing bonds to finance purchases of equipment and structures. C) reducing risk by decreasing corporate debt loads. D) converting loans into securities.
Which of the following is a normative economic statement?
A. The Federal budget deficit rose by 120 billion dollars B. The unemployment rate is expected to fall next month C. A trade surplus of 200 billion dollars should be our policy goal D. The federal funds rate was reduced by half a percentage point
A higher price level causes
A. the aggregate demand curve to shift to the left. B. the C + I + G + X curve to shift down. C. the aggregate demand curve to shift to the right. D. the C + I + G + X curve to shift up.