Securities sold in financial markets change value ______.
a. based on government mandates
b. based on investor expectations
c. when the board sets their price
d. in coordination with similar firms
b. based on investor expectations
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Economic analysis suggests that countercyclical macro-policy will
a. be difficult to time properly because of uncertainty about the future direction of the economy. b. be difficult to implement because we do not know whether monetary policy is transmitted through the interest rate, or whether it affects aggregate demand directly. c. reduce the natural rate of unemployment when macro-policy is persistently expansionary. d. help reduce economic instability if, and only if, we are willing to tolerate double-digit inflation.
Refer to Table 3.2, which shows some costs and benefits of having your car repaired. Suppose you use your car to deliver pizzas. If your wage increases from $10 to $20 per hour, what happens to your best choice of hours to spend on car repairs?
A. It increases by 1 hour.
B. It decreases by 1 hour.
C. It doesn't change.
D. It decreases by 2 hours.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
