If firms are more optimistic that future profits will rise and remain strong for the next few years, then
A) investment spending will remain unaffected. B) investment spending will rise and then fall.
C) investment spending will rise. D) investment spending will fall.
C
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If the Fed conducts an open market purchase of Treasury bonds, this will
A) encourage banks to make more loans and will increase the money supply. B) encourage banks to make more loans and will decrease the money supply. C) cause banks to reduce their loans and will increase the money supply. D) cause banks to reduce their loans and will decrease the money supply.
?
Macro AD-AS Model
In Exhibit 14A-4, the self-correction argument is that in the long run, competition:
A. from unemployed workers causes an increase in nominal wages and a leftward shift in SRAS. B. from unemployed workers causes a rightward shift in SRAS. C. among firms for workers increases nominal wages and this causes a leftward shift in SRAS. D. among consumers causes an increase in the CPI and a rightward shift in SRAS.
One problem with industrial policies is that
A) R&D only benefits the firm that conducts it. B) governments usually target the wrong industries. C) it is difficult to measure the extent of market failure. D) it is not politically popular to support industries.
Which of the following is considered expansionary fiscal policy?
A) Congress decreases the income tax rate. B) Legislation increases a college tuition deduction from federal income taxes. C) The Arizona legislature cuts highway spending to balance its budget. D) Congress increases defense spending.