In the early 1980s the government's primary method of combating inflation was
A) price and wage controls.
B) undoing the "self-inflicted" wounds.
C) restrictive monetary policy.
D) indexing bonds to protect savers.
C
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Suppose the price of gas increases by 20%. Will demand be more elastic if consumers have 3 weeks or 3 years to adjust to this price change?
Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model has a comparative advantage in manufactured output. Will workers be better or worse off following the opening of trade with other countries?
a. Workers will be better off because the nominal wage increases. b. Workers will be worse off because the nominal wage decreases. c. Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the real wage in terms of the manufactured good falls. d. Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the real wage in terms of the manufactured good rises.
The set of fiscal policies that would be most contractionary would be a(n):
a. Increase in government spending and taxes b. Decrease in government spending and taxes c. Increase in government spending and a decrease in taxes d. Decrease in government spending and an increase in taxes
What prediction about growth would most economists make if a government enacts a tax on all transactions in financial markets?
A. The tax would reduce growth because it would make it harder for those with productive opportunities to obtain funds from savers. B. The tax would increase growth because it would encourage people to leave the unproductive financial sector and move to a useful sector of the economy. C. The tax would probably have no effect on growth because it would not affect capital or technology. D. The effects would depend on whether it was borne primarily by the rich or by the poor.