“If economic forecasting was a more exact science, the business cycle could be entirely corrected by fiscal measures.” Do you agree?
What will be an ideal response?
Exact forecasting, if possible, would still not solve all of the problems encountered in trying to correct the business cycle. There is also the problem of timing the enactment and application of fiscal policy, not to mention the coordination of monetary policy and international economic policies, or reduced private spending (“crowding out”).
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A British investor buys $40,000 worth of stocks in the U.S. stock market. For the U.S. we would predict ________.
A. aggregate demand will fall B. aggregate supply will rise C. aggregate demand will rise D. aggregate supply will fall
The actual real wage must be below the equilibrium real wage in order to encourage firms to produce at any output level above the natural rate
Once workers realize this situation, their expected price level will gradually rise and they will demand a higher nominal wage. This description of a business cycle adjustment is part of which of the following theories? A) Classical model B) original Keynesian model C) Friedman fooling model D) the RBC model
If MFC > MRPL, the firm should
A) hire more workers. B) lower wages. C) get rid of some capital. D) reduce the number of workers.
If a firm can vary all of its factors of production, it is operating in
A) the long run. B) the immediate run. C) equilibrium. D) the short run.