A central tenet of the position against policy activism is that
A) consumption spending is highly unstable.
B) consumption spending is highly stable.
C) aggregate policies have little effect on consumption.
D) instability in private consumption will always be offset by variations in other elements of private spending.
B
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Suppose there are only two goods (bread and wine) and only two countries (England and Portugal). In England, the cost of producing 1 bottle of wine is 4 loaves of bread. What is the cost of producing 1 loaf of bread in England? Under what circumstances will England specialize in bread production and purchase its wine from Portugal? Explain.
What will be an ideal response?
Which of the following is true of public goods?
a. The market mechanism helps to signal the quantity that is demanded by the public. b. Payment for consumption is efficiently provided by market prices. c. Consumption by one person does not preclude consumption of the same good by another person. d. The public sector is guided to produce the correct quantity by market prices. e. Voluntary contributions will be sufficient to finance the production of public goods.
Inflation:
a. Never hurts the economy. b. Only hurts the economy as a whole when it is not expected. c. Never redistributes income and wealth. d. Hurts the economy when incentives are affected.
The FE line
A. slopes downward. B. is horizontal. C. is vertical. D. slopes upward.