Incentive problems in contractual relationships generate
A. costs that decrease value.
B. costs that increase value.
C. revenues that increase value.
D. revenues that decrease value.
Answer: A
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Fed policies since the 1980s have attempted to
A) overshoot natural real GDP. B) undershoot natural real GDP. C) "stall" the economy whenever natural real GDP is growing too fast. D) A and B. E) none of the above.
Specialization and trade can create more wealth (output of goods and services): a. when we only trade for things we could not produce ourselves
b. when each person specializes in what they do relatively best and trade for the rest. c. only if we gain and other countries lose. d. only with certain nations.
The term crowding out refers to decreases in the interest rate caused by government budget surpluses
a. True b. False Indicate whether the statement is true or false
Use the following graph with data for a private closed economy to answer the next question.
At the $150 billion level of real GDP, aggregate expenditures are
A. more than real GDP, so real GDP will fall. B. less than real GDP, so real GDP will rise. C. more than real GDP, so real GDP will rise. D. equal to real GDP, so there will be no change in real GDP.