The economy is in a recessionary gap, wages are inflexible downward, and investment spending is insensitive to changes in the interest rate. In this situation, a Keynesian is likely to advocate the use of __________ policy
A) expansionary monetary
B) contractionary monetary
C) expansionary fiscal
D) contractionary fiscal
C
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The current account balance is equal to
A) exports - imports - net interest + net transfers. B) exports - imports + net interest + net transfers. C) imports - exports + net interest - net transfers. D) exports - imports - net interest - net transfers. E) imports - exports + net interest + net transfers.
Since the current tax system is fairly ineffective at redistributing income, some people think this indicates
A. Government failure. B. A negative Gini coefficient. C. Market failure. D. A problem with externalities.
Suppose a business is paying less than W E to its employees. How would this affect unemployment?
a. There would be no unemployment because demand would exceed supply, meaning
all workers would have a job.
b. There would be no unemployment because lower wages would mean that there are
more positions open.
c. There would still be unemployment because many workers would refuse to work for
such a low wage.
d. There would still be unemployment because there would not be enough jobs for all of
the available workers.
The most common form of tariff is a countervailing duty
Indicate whether the statement is true or false