The Fed raises the federal funds rate. Which of the following changes occurs most rapidly?
A) Exchange rate rises.
B) Consumption expenditure decreases.
C) Aggregate demand decreases.
D) Real GDP growth decreases.
E) Inflation rate decreases.
A
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Which of the following is not a valid criticism of discretionary fiscal policy? a. The implementation of fiscal policy is sometimes difficult
b. Time lags in fiscal policy are long. c. Fiscal policy works only during periods of stagflation. d. Fiscal policy often affects only current income, but many economic decisions are made on the basis of permanent income. e. Fiscal policy might have undesirable long-term effects on aggregate supply.
Spending money on a new car instead of a used car when you are on a fixed budget is an example of:
A. the incursion of an opportunity cost. B. isolating variables. C. a bad thing to do because you run out of money. D. living on the edge.
Suppose output is above the natural level of output. In a fixed exchange rate regime, explain the two ways the economy can return to the natural level of output
What will be an ideal response?
When government intervenes in the production process because external costs exist, it typically attempts to shift the industry's
A) demand curve to the right. B) demand curve to the left. C) supply curve to the right. D) supply curve to the left.