A fiscal policy that reduces taxes or increases government spending will cause a(n)
a. increase in real GDP and a decrease in the price level.
b. increase in real GDP and an increase in the price level.
c. decrease in real GDP and a decrease in the price level.
d. decrease in real GDP and an increase in the price level.
b
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Assume health insurance is provided universally by the government. This would
A) force every taxpayer to bear the costs of adverse selection. B) force every taxpayer to bear the costs of moral hazard. C) force the government to deal with adverse selection problems. D) force foreign governments to deal with moral hazard problems.
The 95% confidence interval for the dynamic multipliers should be computed by using the estimated coefficient ±
A) 1.96 times the RMSFE. B) 1.96 times the HAC standard errors. C) 1.96, since the HAC errors are standardized. D) 1.64 times the HAC standard errors since the alternative hypothesis is one-sided.
A decrease in transfer payments or an increase in taxes would ____ disposable income of households and thus ____ in consumption purchases
a. increase; increase. b. increase; decrease. c. decrease; increase. d. decrease; decrease.
According to the monetarist point of view
A. to avoid inflation, the Federal Reserve should create reserves at the same rate as the velocity of money. B. velocity of money is not constant; therefore, the increase in the money supply should not be constant. C. in the short run, increased unemployment and/or reduced inflation are the result of a reduction in the growth of the money supply. D. in the short run, changes in the money supply can have no effect on output in the economy, only on prices.