U.S. and Japanese automakers __________ during the automobile VER of the 1980s.
a. both suffered losses
b. were locked in a contentious trade war
c. both enjoyed higher prices and higher profits
d. both felt that the other side had more gains
Answer: c. both enjoyed higher prices and higher profits
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What is the economic way of thinking, and why is it important?
What will be an ideal response?
If fiscal policy makers increase aggregate demand in an attempt to decrease the unemployment rate below the natural rate of unemployment, then: a. the potential GDP will decrease
b. the potential GDP will increase. c. the only lasting impact of the policy is a higher price level. d. the only lasting impact of the policy is higher real GDP. e. the only lasting impact of the policy is lower real GDP.
In the 1960s, U.S. economy experienced
a. a substantial decline in real GDP but limited inflation. b. a substantial decline in real GDP coupled with significant inflation. c. substantial real GDP growth coupled with significant inflation. d. substantial real GDP growth with limited inflation.
The LM curve is drawn for a given:
a. money supply. b. interest rate. c. nominal income. d. real income.