Stimulus checks, lower interest rates, decrease in the reserve requirement and lower taxes are all examples of
A. Monetary Policy
B. Fiscal Policy
C. Contractionary Policy
D. Expansionary Policy
Ans: D. Expansionary Policy
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In the long run, perfectly competitive firms make zero economic profit, that is, their owners make a normal profit
Indicate whether the statement is true or false
Which of the following will most likely occur during the recovery phase of a business cycle?
a. Real GDP rises, and unemployment falls. b. Real GDP declines, and inflation rises. c. Interest rates rise, and the number of business failures rise. d. Inflation rises, and employment falls.
If credit cards were suddenly ruled illegal and were no longer used, the most likely effect would be a decrease in the
a. demand for money. b. level of cash balances. c. average checking account balance. d. velocity of circulation.
Budget deficits are inflationary when
a. the Federal Reserve contracts the money supply. b. the economy has lots of slack and the aggregate supply curve is horizontal. c. the economy is at full employment and the aggregate supply curve is vertical. d. private citizens buy the bonds to finance the debt.