The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.
A. business
B. government
C. household
D. capital market
B. government
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An increase in market demand will cause an increase in industry output in the long run because
A. new firms enter the industry. B. new firms enter the industry and all firms increase their output. C. all firms decrease their output but more new firms enter. D. no firms enter but the existing firms increase their output.
Assume a nation has a fixed exchange rate, and the central bank lowers the discount rate. What is the net effect on the unemployment rate? Answer assuming all the adjustments have worked their way through the macroeconomic system, and it is in equilibrium
a. The unemployment rate rises. b. The unemployment rate falls. c. The unemployment is not affected. d. The change in the unemployment rate depends on the degree of international capital mobility.
To eliminate a recessionary gap, Keynesian theory indicates that government should
A) increase taxes. B) decrease taxes. C) increase government purchases. D) decrease government purchases. E) b or c
After the Revolutionary War, the U.S. monetary system was based on gold. Historically, why did the U.S. adopt the use of gold as a currency? How does this compare with the currency used today?
What will be an ideal response?