If there is currently a recessionary gap, a decrease in aggregate demand would make the recessionary gap larger
a. True
b. False
Indicate whether the statement is true or false
True
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In the money market, if the nominal interest rate is below the equilibrium level,
A) the demand for money curve will shift leftward. B) the quantity of money demanded exceeds the quantity of money supplied. C) the quantity of money supplied exceeds the quantity of money demanded. D) the supply of money curve will shift leftward. E) asset prices will rise.
A production possibilities curve that is "bowed out" or concave to the origin:
a. illustrates a tradeoff in which the opportunity cost of a good increases with the level of its production. b. illustrates a tradeoff in which the opportunity cost of a good decreases with the level of its production. c. illustrates a tradeoff in which the opportunity cost of a good is constant at all levels of production. d. demonstrates the fallacy of composition.
The theory of rational expectations concludes that
A. discretionary policies are more effective than rules in stabilizing the economy. B. discretionary fiscal policy is a more powerful stabilization device than is discretionary monetary policy. C. discretionary monetary policy is a more powerful stabilization device than is discretionary fiscal policy. D. since expectations can leave discretionary stabilization policies ineffective, it is better to rely upon policy rules.
The term "value added" refers to the dollar value of
A. the intermediate goods purchased by an industry plus the profits of the industry. B. an industry's sales less the dollar value of the intermediate goods purchased by the industry. C. an industry's sales plus profits. D. the intermediate goods and services purchased by an industry.