Suppose the economy was in equilibrium, and the national government increased spending by $200 billion. Monetarist theory would predict that the nation's:
a. Real risk-free interest rate will rise causing real GDP to fall.
b. Real risk-free interest rate will rise causing the monetary base, and therefore, the money supply to rise.
c. Real risk-free interest rate will remain unchanged, but the money multiplier will rise.
d. Real risk-free interest rate will fall causing real GDP to rise.
e. Real risk-free interest rate will rise but real GDP will remain the same.
.E
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The Bureau of Labor Statistics does not count discouraged workers as unemployed. Suppose discouraged workers were counted as unemployed. Explain how the unemployment rate and the labor force participation rate would change
What will be an ideal response?
The Great Depression of the 1930s, with a large number of workers and factories unemployed, would be represented in a production possibilities frontier graph by
A) a point outside the frontier. B) an intercept on either the vertical or the horizontal axis. C) a point inside the frontier. D) a point on the frontier.
Ad valorem tariffs are
A) import taxes stated in ads in industry publications. B) import taxes calculated as a fixed charge for each unit of imported goods. C) import taxes calculated as a fraction of the value of the imported goods. D) the same as import quotas. E) import taxes calculated solely on the origin country.
Monopolies tend to
A) hire more labor than duopolists or competitive firms, hence they are inefficient. B) hire more labor than competitive firms but less than duopolists. C) hire less labor than competitive firms because they produce at an inefficient level. D) hire more labor because they produce at an inefficient level.