When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline
B. increase; raise; decline
C. decline; lower; expand
D. decline; raise; decline
Answer: C
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According to the traditional (crowding-out) view, which of the following is most likely to result if a substantial portion of government expenditures is financed by borrowing rather than taxation?
a. no change in interest rates and an increase in saving b. higher interest rates and an outflow of foreign capital c. higher interest rates and a reduction in private domestic investment d. lower interest rates and an inflow of foreign investment
Which of the following correctly describes the marginal rate of return on capital?
a. The marginal rate of return equals the marginal product of capital multiplied by the marginal revenue product of capital. b. The marginal resource cost of capital expressed as a percentage of its marginal revenue product. c. The marginal revenue product of capital expressed as a percentage of its marginal cost. d. The marginal rate of return equals the marginal product of capital added to the marginal revenue product of capital.
Suppose that inventory investment is $20 billion and (total) investment is $680 billion. What does purchases of newly produced capital goods equal?
A) $715 billion B) $785 billion C) $750 billion D) $35 billion E) There is not enough information to answer this question.
A high rate of black male joblessness
A. has not existed since the Great Depression. B. has developed just since the 2001 recession and the subsequent "jobless recovery." C. has been very serious problem for at least a decade. D. never existed.