The time it takes for the Fed's purchase of government securities to ultimately change aggregate demand is called the _____
a. recognition lag
b. implementation lag
c. effectiveness lag
d. decision-making lag
e. self-correction lag
c
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Brenda's Bakery started selling coffee along with pastries. In order to increase total sales she should
a. Increase the prices on coffee b. Decrease the price on pastries c. Increase the price of pastries d. Shut down
If a flat tax plan allowed individuals to deduct a standard allowance of $20,000 and the flat tax rate was 20 percent, an individual earning $100,000 would pay an average tax rate of 20%
a. True b. False Indicate whether the statement is true or false
Elasticities are often lower in the short run than in the long run
a. True b. False Indicate whether the statement is true or false
Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real GDP and current international transactions balance in the context of the Three-Sector-Model? a. Real GDP falls and current international transactions balance
becomes more negative (or less positive). b. Real GDP rises and current international transactions balance becomes more negative (or less positive). c. Real GDP and current international transactions balance remain the same. d. Real GDP rises and current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.