According to the structural stagnation hypothesis, the expansionary policy carried out by the government led to the illusion that the policies were:
A. improving U.S comparative advantages.
B. effective in reducing the trade deficit.
C. causing goods inflation.
D. leading to long-term economic health.
Answer: D
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Actual investment spending includes spending by consumers on
A) services. B) nondurable goods. C) new houses. D) durable goods.
"Missing markets" result from
a. high transactions costs of such markets. b. strict price controls. c. the inability of producers to gain economies of scale. d. foreign countries dominating a domestic market for a product.
If there is a recession, the Fed would most likely encourage banks to provide loans by:
a. buying government securities. b. raising the discount rate. c. selling government securities. d. raising the federal funds rate.
A less elastic demand for a good could result from
a. strong supply-side reactions b. an increased number of available substitutes c. lower consumer incomes d. a longer time horizon e. a shorter time horizon