Private ownership and competitive markets are important for economic growth because they provide individuals with a strong incentive to
What will be an ideal response?
care for resources and use them beneficially, innovate and introduce new products that are highly valued relative to their cost, and produce goods efficiently
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A positive statement
A) must always be right. B) cannot be tested. C) might be right or wrong. D) depends on someone's value judgment. E) cannot be negative.
If the economy is suffering a recession, inventories are probably falling.
Answer the following statement true (T) or false (F)
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and real GDP falls. b. The quantity of real loanable funds per time period and real GDP remain the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. The quantity of real loanable funds per time period rises, and real GDP remains the same. e. The quantity of real loanable funds per time period rises, and real GDP rises.
Based on the diagram, if potential output equals 5,000 and the real interest rate is 1 percent, then there is ________ gap and the Fed must ________ the real interest rate so that output will equal potential output. 
A. an expansionary; raise B. an expansionary; reduce C. a recessionary; raise D. a recessionary; reduce