One similarity between the policy recommendations of the new classical and monetarist models is that
a. both believe that monetary policy has much stronger employment effects than does fiscal policy.
b. are policy activists.
c. both believe in the natural rate of output.
d. both believe that discretion is preferable to rules.
e. none of the above.
C
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The nominal interest rate is 7% and the real interest rate is 2.75%. What is the inflation rate?
A) 3.75% B) 4.55% C) 4.25% D) 9.75%
Consider two people, Sandy Smith, who earns $25,000 . and Gary Carver, who earns $50,000 . If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent, then:
a. Gary and Sandy both pay taxes of the same percentage of total income. b. Gary and Sandy pay the same amount of taxes. c. Gary pays twice the tax amount Sandy pays. d. Gary pays three times the tax amount Sandy pays. e. Sandy does not pay taxes.
Which of the following is the first step when economists analyze how individuals make choices?
a. Considering what choices are possible for individuals b. Thinking about which choices individuals actually make c. Considering what choices individuals might prefer d. Considering which choices might provide maximum utility
An increase in wealth would cause the IS curve to
A. shift up and to the right. B. shift down and to the left. C. remain unchanged. D. shift up and to the right only if people face borrowing constraints.