Which of the following correctly distinguishes an active versus passive policy approach?
a. An active policy approach is restricted to open-market operations by the Fed, while a passive policy approach includes changes in the required reserve ratio, and fiscal stimulus in the form of government spending.
b. An active policy approach is used to close a contractionary gap, while a passive policy approach is used to close an expansionary gap.
c. An active policy approach is based on monetary aggregate targets, while a passive policy approach is addressed to interest rate stability.
d. An active policy approach is based on the notion that discretionary fiscal or monetary policy can reduce the costs imposed by an unstable private sector. A passive approach is based on the idea that discretionary policy contributes to the instability of the economy and thus is part of the problem.
d
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Because of diminishing marginal utility, you
A. should never buy more than one unit of a good, since additional units decrease your total utility. B. have to consider the effect of additional units on your total utility when you make purchases. C. wind up paying for units that you receive no benefit from. D. always want to increase your consumption of a good until the marginal utility you get is zero.
The relationship between the overall price level in the economy and total production by firms is shown in the:
A. aggregate demand curve. B. aggregate supply curve. C. inflation rate. D. business cycle.
A quota is a
a. tax on a specific quantity of imported goods b. limited number of foreign firms that can sell imported goods c. restrictive health and safety standard that raises costs d. tax on domestic producers so that they can make higher profits e. limit on the quantity of a good that can be imported
In moving along a given budget line:
A. the prices of both products and money income are assumed to be constant. B. each point on the line will be equally satisfactory to consumers. C. money income varies, but the prices of the two goods are constant. D. the prices of both products are assumed to vary, but money income is constant.