Nominal anchors limit overshooting by:
a. fixing exchange rates.
b. distinguishing between permanent and temporary changes.
c. slowing down expectations formation.
d. limiting temporary changes to exchange rates.
Ans: b. distinguishing between permanent and temporary changes.
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According to the Laffer curve, we know with certainty that an increase in the tax rate will
A) cause tax revenue to increase. B) cause tax revenue to decrease. C) have no effect on tax revenue. D) cause tax revenue to increase, decrease, or remain unchanged.
Early in U.S. history health insurance was provided to cover
a. income loss due disability or disease. b. hospital expenses. c. routine physicians' services. d. the catastrophic cost of medical care including hospitalization and physicians' services. e. medical costs due to specific diseases such as tuberculosis and alcoholism.
Most economists believe that in the short run
a. real and nominal variables are determined independently and that money cannot move real GDP away from its long-run trend. b. real and nominal variables are determined independently but that money can temporarily move real GDP away from its long-run trend. c. real and nominal variables are highly intertwined but that money cannot move real GDP away from its long-run trend. d. real and nominal variables are highly intertwined and that money can temporarily move real GDP away from its long-run trend.
When current economic conditions are bad, people are ________ inclined to save, and when they predict bad future economic conditions they are ________ inclined to save now.
A. less; less B. more; less C. less; more D. more; more