Suppose there is a Fed purchase of bonds and simultaneous tax cut. We know with certainty that this combination of policies must cause
A) an increase in the interest rate (i).
B) a reduction in i.
C) an increase in output (Y).
D) a reduction in Y.
C
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The legislative lag represents
A) the time it takes for policy makers to obtain data indicating what is happening in the economy. B) the time it takes for policy makers to be sure of what the data are signaling about the future course of the economy. C) the time it takes to pass legislation to implement a particular policy. D) the time it takes for policy makers to change policy instruments once they have decided on the new policy. E) the time it takes for the policy actually to have an impact on the economy.
In the Keynesian model in the short run, an increase in the money supply will cause
A) an increase in output and a decrease in the real interest rate. B) a decrease in the real interest rate but no change in output. C) an increase in the real interest rate and an increase in output. D) no change in either the real interest rate or output.
Marginal thinking is best demonstrated by: a. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. b. deciding to never purchase a coat made with animal skins or furs
c. acquiring all the information relevant to a choice before making that choice. d. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake.
Which of the following would decrease the unemployment rate?
A) an increase in the minimum wage B) an increase in the efficiency wage C) an increase in labor union membership D) government aid to retrain unemployed workers