When an economy is operating below its potential capacity, Keynesian economists argue that
a. taxes should be raised if the government is currently running a budget deficit.
b. taxes should be lowered but only if the government is running a budget surplus.
c. the government should cut taxes and/or increase expenditures in order to stimulate aggregate demand.
d. both a and b are correct.
e. all of the above are correct.
C
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Which of the following is TRUE of M2?
A) It is larger than M1. B) It excludes savings deposits. C) It does not include highly liquid components of the money supply. D) It is less than M1.
The Federal Reserve provides gold in exchange for Federal Reserve notes
a. True b. False Indicate whether the statement is true or false
Unanticipated expansionary monetary policy will increase economic growth and push inflation upward while lowering real interest rates. This will cause
a. an increase in the demand for foreign currencies and a decline in the foreign exchange value of the dollar. b. a decrease in the demand for foreign currencies and a decline in the foreign exchange value of the dollar. c. an increase in the demand for foreign currencies and an increase in the foreign exchange value of the dollar. d. a decrease in the demand for foreign currencies and an increase in the foreign exchange value of the dollar.
If demand is elastic and the price of a product decreases by 100 percent, then
A. the decrease in quantity demanded is greater than 0 percent. B. the change in quantity demanded is greater than 100 percent. C. the change in quantity demanded is equal to 100 percent. D. the change in quantity demanded is less than 100 percent.