When the Federal Reserve increases its target rate of inflation, it will set a ________ real interest rate at every inflation rate and the aggregate demand curve will ________.
A. lower; shift to the right
B. higher; shift to the left
C. lower; shift to the left
D. higher; shift to the right
Answer: A
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For a trucking company, all of the following are examples of fixed costs, except
a. Tax accountant fees b. Package designing fees c. Insurance d. Gasoline costs
Which of the following is a correct conclusion regarding the successful implementation of fiscal policy?
a. Successful fiscal policy would be easy to achieve if Congress would stay out of the economy and permit natural market forces to restore full-employment equilibrium. b. Successful fiscal policy is difficult to achieve because in the real world the investment, net exports, and consumption schedules are constantly shifting. c. Successful fiscal policy is much easier to achieve today because econometric models make economic forecasting much easier. d. As the income-expenditure model suggests, fiscal policy planners can move GDP to any level they please by changing tax and spending levels.
Economic analysis indicates that the monetary policy of the 1930s, which shifted back and forth between restrictive monetary policy and expansionary monetary policy, would likely result in
a. economic stability and growth in real levels of output. b. keeping the general level of prices relatively stable because the periods of restrictive policy would just offset the periods of expansion. c. an environment of uncertainty, which would lead to economic instability. d. economic stability, because changes in monetary policy can be counted on to exert a predictable impact on the economy quickly.
People who report being unemployed but who, in fact, are working for "under the table" pay to avoid taxes on their earnings are really employed and therefore cause the reported unemployment rate to be higher than it would otherwise be
a. True b. False Indicate whether the statement is true or false