Critics of active monetary and fiscal policy emphasize
a. that policy affects the economy with a lag and our ability to forecast future economic conditions is poor.
b. "leaning against the wind" of economic change to stabilize the economy.
c. cutting government spending, raising taxes, and reducing the money supply when aggregate demand is excessive.
d. boosting government spending, lowering taxes, and increasing the money supply when aggregate demand is low.
a
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Picture a competitive market with the usual upward sloping supply curve and downward sloping demand curve. If the current price is creating a shortage, then market forces will cause the price to adjust and
A. quantity supplied will increase. B. quantity demanded will increase. C. quantity supplied will decrease. D. demand will decrease.
When you set aside the money you have today in order to purchase goods and services later on, you are using money as a
A) store of value. B) medium of exchange. C) standard of deferred payment. D) unit of accounting.
There is a temporary adverse supply shock. Given the effects of this shock, if the central bank chooses to return unemployment closer to its previous rate it would
a. raise the rate at which it increases the money supply. In the long run this will shift the short-run Phillips curve right. b. raise the rate at which it increases the money supply. In the long run this will shift the short-run Phillips curve left. c. reduce the rate at which it increases the money supply. In the long run this will shift the short-run Phillips curve right. d. reduce the rate at which it increases the money supply. In the long run this will shift the short-run Phillips curve left.
Suppose Sarah owns a small company that makes wedding cakes. The accompanying table shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day.Number of Cakes Per DayTotal Cost Per Day0$1001$1802$2203$3004$4005$5206$660 If Sarah's fixed costs double, then in the short run, her profit-maximizing level of output:
A. will shrink to zero if she starts earning a loss. B. will increase. C. will not change. D. will decrease.