Suppose real GDP is $12.6 trillion and potential GDP is $12.4 trillion. To move the economy back to potential GDP, Congress should
A) lower government purchases by $200 billion.
B) raise taxes by $200 billion.
C) lower government purchases by an amount less than $200 billion.
D) lower taxes by $200 billion.
E) raise taxes by an amount more than $200 billion.
C
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If the expected inflation rate rises, then the short-run Phillips curve ________ and the long-run Phillips curve ________
A) does not shift; shifts B) does not shift; does not shift C) shifts; does not shift D) shifts; shifts E) might shift; shifts only if the short-run Phillips curve shifts
One can invest in a pool of mortgages by buying
A) long term bonds. B) mortgage backed securities. C) penny stocks. D) stocks with a beta of less than one.
If U.S. securities pay 6 percent interest, and if Great Britain's securities pay 8 percent interest, then
a. pounds depreciate relative to dollars. b. pounds appreciate relative to dollars. c. Great Britain's imports will fall. d. Great Britain's exports will rise.
Which entity does the graph likely represent?
a. a household
b. a business firm
c. a government
d. the whole economy