Policy makers should manage aggregate demand so that it grows in line with the economy's capacity to produce. This task is the realm of
a. growth policy.
b. stabilization policy.
c. labor policy.
d. inflation policy.
b
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The business cycle refers to
A) fluctuations in the level of real GDP around potential GDP. B) changes in the level of nominal GDP. C) changes in the level of the stock market. D) changes in the level of employment.
Which of the following is not a reason for the Ricardian equivalence theorem to fail to hold?
A) tax distortions B) people can borrow from the government. C) finite-lived people. D) credit market imperfections.
Economic analysis requires us to combine:
A. unlimited resources with limited wants. B. theory with observations. C. developed and developing nations. D. republicans and democrats.
An increase in the price level, other things remaining the same, may be expected to result in ____ the consumption function.
A. a downward shift of B. a movement along C. an upward shift in D. no effect on