Government intervention in a perfectly competitive market
A) reduces economic well-being.
B) is an illustration of the "invisible hand theorem."
C) increases economic well-being.
D) guarantees maximized well-being.
A) reduces economic well-being.
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If the inflation rate in 2013 was 2.5 percent, and because of that people expect the inflation rate in 2014 will also be 2.5%, these people are said to have
A) rational expectations. B) expectations of stagflation. C) adaptive expectations. D) expectations of supply shocks.
Given Keynesian assumptions about the shape of the aggregate supply curve and an economy suffering a recession, which of the following is most likely to occur if the Fed pursues expansionary monetary policy?
A. The equilibrium price level and output will both increase until full employment is reached. B. The equilibrium price level and output will both decrease. C. The equilibrium price level will increase but output will stay the same. D. The equilibrium output will increase but the price level will stay the same until full employment is reached.
In an open economy with flexible exchange rates, monetary policy affects ________ through changes in the real interest rate and affects ________ through changes in the exchange rate.
A. productivity and growth; consumption B. taxes and saving; net exports C. consumption and investment; net exports D. net exports; taxes and saving
Figure 33-8
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In Figure 33-8, which of the following movements reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy?
A. C to B B. D to C C. C to E D. D to E