Fiscal policy is more effective when the exchange rate is flexible and the economy is open.
Answer the following statement true (T) or false (F)
False
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Japan experienced periods of deflation — a declining price level — during the 1990s. During a deflationary period, which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period
What will be an ideal response?
Assume there is an improvement in the technology used to produce Blu-ray disc players. What could be expected to happen to the equilibrium price and quantity in the market for Blu-ray disc players?
A) Equilibrium price would increase and equilibrium quantity would decrease. B) Equilibrium price and quantity would both decrease. C) Equilibrium price would decrease and equilibrium quantity would increase. D) Equilibrium price and quantity would both increase.
Suppose the MPC is .6 and consumption increases by $8 billion. Consequently, total income through the multiplier effect will:
a. $20 billion b. $8 billion c. $15 billion d. $13.3 billion
The objective of rent controls is to
A. encourage the construction of new rental units. B. ensure an adequate supply of rental housing for the poor. C. keep rents below levels that would be observed in a freely competitive market. D. raise revenue for the local government.