It is possible that two different economists can examine the same situation, such as school funding, and reach entirely different conclusions. Why is this so?
What will be an ideal response?
Reasoning resulting in differing results includes the time period under examination, the data
sources and proxies used, the econometric tools employed, and many other reasons. This is
not to say that because different researchers come to different conclusions the analysis is
confused. It just means further investigation is needed.
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Under a fixed exchange rate system, a real interest rate corresponding to the upward-sloping portion of the NCF curve reflects the fact that a central bank ________, and the real interest rate corresponding to the horizontal portion of the NCF curve
reflects the fact that a central bank ________. A) can always supply more domestic currency; can always meet the demand for foreign currency B) can always supply more domestic currency; is limited in meeting the demand for foreign currency C) is limited in meeting the demand for domestic currency; can always meet the demand for foreign currency D) is limited in meeting the demand for domestic currency; is limited in meeting the demand for foreign currency
Under alternative scenarios, the national debt as a percentage of GDP is projected to rise dramatically
a. True b. False
Ongoing inflation has its own momentum because
a. prices rise whenever firms see other prices rising b. the public learns to expect inflation and adjusts its decisions in response c. public officials are unwilling to stop prosperity d. more and more people now have jobs e. we are always playing catch up, trying to get what we lost when others raise prices
Which of the following things can a government do to lower the costs of inflation?
a. sell inflation-indexed bonds and rewrite tax laws so that real rather than nominal gains are taxed b. sell inflation-indexed bonds but not rewrite tax laws so that real rather than nominal gains are taxed c. rewrite tax laws so that real rather than nominal gains are taxed, but not sell inflation-indexed bonds d. neither sell inflation-indexed bonds nor rewrite tax laws so that real rather than nominal gains are taxed