Economic growth will NOT result in deflation if aggregate demand shifts
A. inward to the left as aggregate supply shifts outward to the right.
B. outward to the right as aggregate supply shifts inward to the left.
C. inward to the left at the same speed as aggregate supply.
D. outward to the right at the same speed as aggregate supply.
Answer: D
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In the efficiency wage model with the efficiency wage above the market-clearing wage, when employment is at its full-employment level
A) labor supply equals labor demand. B) there is an excess supply of labor. C) there is an excess demand for labor. D) there could be either an excess demand for, or an excess supply of, labor.
The Fed's countercyclical policy tools to eliminate a recession include lowering:
a. the required reserve ratio, cutting the discount rate, and selling government bonds on the open market. b. the required reserve ratio, raising the discount rate, and selling government bonds on the open market. c. the required reserve ratio, raising the discount rate, and buying government bonds on the open market. d. the discount rate, cutting the discount rate, and raising the margin requirement. e. the reserve requirement, lowering the discount rate, and buying government bonds on the open market.
The rate of full employment is usually considered to be:
(a) 100%. (b) 98%. (c) 97%. (d) 96%.
The Earned Income Tax Credit (EITC) is a more efficient means to redistribute income to people below the poverty line than direct cash transfers.
Answer the following statement true (T) or false (F)