According to Baumol and Blinder, the real-world multiplier will be smaller than 1/(1 ? MPC) because the 1/(1 ? MPC) measure is based on
a. a model that ignores inflation associated with the expansion of income.
b. a model that ignores taxes that tend to change as income changes.
c. a model that ignores the effects of international trade.
d. all of the above.
d
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Refer to Table 12.1. The nominal interest rate for the United States is
A) -0.25%. B) 0.25%. C) 2.15%. D) It cannot be determined from the information provided.
A free market system tends to
a. produce a fairly equal distribution of income. b. pay people exactly what they are worth. c. produce a relatively unequal distribution of income. d. pay most people more than they are worth, at the expense of reducing firms' profits.
If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.
Which of the following is an example of a trade restriction?
A) Japan places a tax on all Korean automobiles. B) Domestic wine is more expensive than wine imported from Chile. C) The United States, Canada, and Mexico sign the NAFTA agreement. D) Consumers prefer German beer to domestic beer.