In an open economy, which of the following will cause a reduction in the size of the multiplier?
A) an increase in the marginal propensity to import
B) an increase on foreign output
C) a reduction in the marginal propensity to save
D) all of the above
E) none of the above
A
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Frictional unemployment includes
A) unemployment caused by normal labor turnover associated with people leaving and entering the labor force. B) unemployment caused by industries moving overseas to better meet foreign competition. C) unemployment caused by a lack of education so that workers do not possess necessary job skills. D) unemployment caused by automation of the work place that displaces unskilled workers.
An advantage of public works over transfer payments as a means of reducing unemployment is that
a. public works provide more direct aid to those suffering most from unemployment. b. transfer payments are unlikely to decrease unintended excess inventories of consumer goods. c. public works require using a large amount of capital goods and producing a large amount of supplies. d. All of these.
A reduction in the required reserve ratio has the instant effect of:
a. Increasing the monetary base. b. Increasing excess reserves. c. Increasing bank shareholders' equity. d. Increasing bank reserves. e. All of the above are correct.
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.