Market economies are likely to suffer from recessions and inflation because the government plans all economic activity.
Answer the following statement true (T) or false (F)
False
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The income and substitution effects of a price change occur because:
a. consumer incomes are not constant. b. consumer substitution rates are not constant. c. income and substitution effects never occur simultaneously. d. of diminishing marginal utility and the equimarginal principle. e. of increasing marginal utility and the equimarginal principle.
Liquidity can be defined as the
a. cash value of money. b. value of money adjusted for inflation. c. value of fiat money when used for spending. d. ease with which an asset can be converted to a spendable asset.
Critics of supply-side economics claim that the economic growth in the 1980s was a direct result of ______.
a. a large budget deficit b. deflation c. tax cuts d. tax increases
To achieve its target when the federal funds rate is above the target range, the Fed should:
A. buy foreign currency. B. follow expansionary policy. C. do nothing. D. follow contractionary policy.