Refer to the above figure. Suppose the economy is in equilibrium at point A
If the Fed tries to stimulate the economy by undertaking an expansionary monetary policy action and this is not expected by the people in the economy, we would expect to see
A) aggregate supply shifts up as people anticipate the effects of the expansionary monetary system. In the short run, real GDP falls to $13 trillion and the price level rises to 120. In the long run, real GDP returns to $14 trillion, and the price level increases further, to 150.
B) aggregate demand increases but people would anticipate this, causing the short-run aggregate supply curve to shift up at the same time, with the new equilibrium of $14 trillion of real GDP and a price level of 100.
C) aggregate demand increases, real GDP increases, and the price level increases in the short run. In the long run, people realize the real situation, causing the short-run aggregate supply curve to shift u
C
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Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $3
A) economic surplus is maximized. B) the quantity supplied is economically efficient but the quantity demanded is economically inefficient. C) not enough consumers want to buy pecans. D) the quantity supplied is less than the economically efficient quantity.
The current account deficits incurred by the United States in the 1990s and early 2000s were caused, in the opinion of many economists, by
A) federal budget deficits. B) a sharp decline in private saving. C) "flight to quality" as foreign investors favored U.S. investments. D) Both B and C are correct.
According to the availability heuristic, we often estimate the frequency of an event by:
A. the ease with which we can recall relevant examples. B. using available data from either the government or other organizations. C. how much we enjoyed the event. D. the degree to which the event resembles stereotypical members of a category.
If a candidate for political office was espousing a "pro-growth" agenda and was focused on universal and free college education, this would have its greatest impact on growth through which source?
A. An increase in economic freedom B. An increase in the number of workers C. An increase in the productivity of workers D. None of these