If the current level of GDP exceeds full employment, the level of GDP can be reduced by
A) reducing the money supply. B) lowering interest rates.
C) increasing spending. D) reducing taxes.
A
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Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. What is the opportunity cost to Dan of making a sandwich?
A. 15 smoothies B. 5 smoothies C. 3 smoothies D. 1/3 of a smoothie
When the Fed raises the federal funds rate,
A) the real interest rate is unchanged so investment and consumption expenditure are not changed. B) the real interest rate increases, thereby decreasing investment and consumption expenditure. C) the real interest rate falls, thereby increasing investment and consumption expenditure. D) investment and consumption expenditure increase, thereby raising the real interest rate. E) the real interest rate increases, thereby decreasing investment and increasing consumption expenditure.
If a negative externality exists, then there is a __________ when society produces the market output instead of the socially optimal output. This exists because the __________ to sellers and third parties are __________ the __________ derived by buyers.
A. net social benefit; costs; greater than; benefits B. net social cost; benefits; less than; costs C. net social cost; costs; greater than; benefits D. net social cost; costs; less than; benefits E. none of the above
The price of a phone call at a pay phone was 5 cents in 1950 and the price of a first-class stamp was 3 cents. In 2014, the pay phone costs 50 cents for a call and a first-class stamp costs 49 cents. We know that
A) both the nominal and the relative price of phone calls increased from 1950 to 2014. B) both the nominal prices of phone calls and first-class stamps increased from 1950 to 2014, but the relative price of stamps increased and the relative price of phone calls decreased from 1950 to 2014. C) all prices increased from 1950 to 2014: Nominal prices of phone calls, first-class stamps, and the relative prices of phone calls and first-class stamps. D) both the nominal prices of phone calls and first-class stamps increased from 1950 to 2014, but we can't tell if the relative prices increased or decreased without more information.