Fiscal policy refers to government policies concerning taxing and spending.
Answer the following statement true (T) or false (F)
True
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The rational expectations hypothesis is based on the assumption that
A) individuals combine effects of past policy actions with their own judgment about future policy effects and changes when forming their expectations. B) individuals adapt in response to past policy actions and changes without looking ahead when forming their expectations. C) firms pay above equilibrium wages to their employees. D) most firms operate in a less than competitive environment.
Which of the following modern methods of financing a corporation was not available to corporations four hundred years ago?
A) selling stock B) selling bonds C) reinvestment. D) All of these methods were used then as well as now.
If the federal government were to run a budget deficit, this would
a. increase the size of the national debt. b. reduce the size of the national debt. c. leave the size of the national debt unchanged. d. increase the national debt only if the government also expands the supply of money.
Which of the following would be an illustration of a microeconomic issue affecting U.S. auto manufacturers?
A) An introduction of new, more fuel efficient models by Japanese competitors. B) A recession in Europe that causes U.S. auto exports to Europe to decline. C) A decline in the demand for new cars in the U.S. due to an economic downturn. D) An appreciation of the U.S. dollar relative to the Japanese yen.