Using a figure show that under full employment, a temporary fiscal expansion would increase output (over-employment) but cannot increase output in the long run
What will be an ideal response?
A temporarily fiscal expansion will move the economy from DD1 to DD2, and output increases. A permanent fiscal expansion will also shift the AA curve to the left and down. The nominal exchange rate appreciates, i.e. E decreases.
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In the 1980s, a new category entitled ________ was added to M1
A) money market mutual fund deposits B) other checkable deposits C) demand deposits D) traveler's checks
The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises,
A) the demand curve shifts rightward. B) the demand curve shifts leftward. C) there is a movement down along the demand curve to a larger quantity demanded. D) there is a movement up along the demand curve to a smaller quantity demanded. E) the demand curve shifts rightward and there is a movement up along the demand curve to a smaller quantity demanded.
If one U.S. dollar can be exchanged for 5 Swiss francs, then 1 franc can be exchanged for:
a. 5 cents. b. 20 cents. c. 50 cents. d. 2 dollars.
Suppose that the United States has an absolute advantage over Mexico in producing both agricultural and manufactured goods. In the U. S., the opportunity cost of 1 unit of agricultural output is 2 units of manufactured goods. In Mexico, the opportunity cost of 1 unit of agricultural output is 1.5 units of manufactured goods. Total production in the U. S. and Mexico will be maximized if
a. the U. S. specializes in both types of output b. Mexico specializes in both types of output c. the U. S. specializes in agricultural goods and Mexico specializes in manufactured goods d. the U. S. specializes in manufactured goods and Mexico specializes in agricultural goods e. each country achieves self-sufficiency