Under adaptive expectations, the short-term effect of an unanticipated shift to a more expansionary macroeconomic policy will be a:
A. temporary reduction in the unemployment rate.
B. permanent reduction in the unemployment rate.
C. temporary reduction in the inflation rate.
D. permanent reduction in the inflation rate.
Answer: A
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When the Federal Reserve buys $200 worth of government securities, the money supply
A) rises by $200. B) rises by more than $200. C) falls by $200. D) falls by more than $200.
Can the Fed manage the federal funds rate?
a. No. It's the rate determined by banks that lend and borrow from each other b. No. It's the rate determined by government c. Yes. They do so by engaging in open market operations d. Yes. They do so by manipulating the discount rate e. Yes. They do so by manipulating the legal reserve requirement
A society consists of three individuals: Sam, Tristan, and Ulyana. In terms of income and utility, Sam is currently best-off, Tristan ranks in the middle, and Ulyana is worst-off. Which of the following statements is correct?
a. Utilitarianism suggests that government policies should strive to maximize Ulyana's utility. b. Liberalism suggests that government policies should strive to increase Ulyana's utility. c. Libertarianism suggests that government policies should strive to improve Tristan's utility at the cost of Sam's utility. d. Libertarianism suggests that government policies should strive to make Sam, Tristan, and Ulyana equally well off.
Recall the Application about the effects of increasing state level Earned Income Tax Credit (EITC) on child health in the United States to answer the following question(s).Recall the Application. According to the study cited in the Application, does EITC improve income distribution?
A. Yes, aside from increasing income for low-income households, it improves the health levels of the worker and their families. B. Yes, EITC encourages workers to sop working and get an education in the health industry. C. No, only the politicians get rich because of EITC. D. No, the level of spending on EITC is so low it has no measurable effects on incomes of the poor.