According to Baumol and Blinder, the lag between the time a policy is implemented and the time it affects aggregate demand is
A. longer for fiscal policy than monetary policy.
B. longer for monetary policy than fiscal policy.
C. approximately equal for both.
D. influenced mainly by the size of the multiplier.
Answer: B
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
In Figure 1 below if the economy were at Y1 then we would expect there to be:
A. an increase in production since PAE < actual output.
B. an increase in production since PAE > actual output.
C. no change in production since PAE = actual output.
D. a decrease in production since PAE > actual output.
Since almost all forms of transportation produce some type of pollution,
a. the government should ban all transportation. b. the government should ban all pollution. c. society has to weigh the cost and benefits when deciding how much pollution to allow. d. refrain from intervening because the market can best solve this problem.
Country X experiences an increase in Real GDP and an increase in per-capita Real GDP. It follows that
A) the residents of country X are happier than they used to be. B) the benefits of economic growth outweigh the costs of economic growth. C) the costs of economic growth outweigh the benefits of economic growth. D) all the residents of country X are "richer" in terms of goods and services than they used to be. E) none of the above