Prices of industrial products and wages tend to be the most "flexible."
Indicate whether the statement is true or false
FALSE
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In an economy where aggregate spending is given by Y = 3,000 + .75Y - 10,000 r, the central bank is currently setting the interest rate at 0.06 (6 percent). If potential output equals 9,500, the central bank must ________ the interest rate to close the ________ gap.
A. raise; expansionary B. lower; recessionary C. lower; expansionary D. raise; recessionary
Suppose a presidential candidate campaigns on the need to improve U.S. infrastructure, a term for capital goods like bridges, highways, and technology (much of it publicly owned). Which would lead to faster growth: government expenditure on capital goods or expenditure on consumption goods such as sports stadiums? Illustrate your answer, drawing appropriate production possibilities frontiers accompanied by an explanation.
What will be an ideal response?
Max has allocated $100 toward meats for his barbecue. His budget line and indifference map are shown in the above figure. If Max is currently at point e,
A) his MRS is less than the trade-off offered by the market. B) he is willing to give up more burger than he has to, given market prices. C) he is not maximizing his utility. D) All of the above.
Fiat money is money
a. backed by land. b. backed by gold or silver. c. that can be converted to gold or silver. d. because a government says it is.