The long-standing debate over rules versus discretion in macroeconomics centers on the following statement ________
A) "discretionary policy can lead to bad long-run outcomes but rules lack flexibility in the short-run"
B) "the speed with which the self-correcting mechanism in the economy acts is in question"
C) "the speed with which unemployment tends to disappear is debatable"
D) all of the above
E) none of the above
A
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Suppose the real wage of a worker remains unchanged between Year 1 and Year 2 but the nominal wage decreases from $20 in Year 1 to $18 in Year 2 . This implies that the price level has: a. increased by 20 percent. b. increased by 25 percent. c. remained unchanged
d. fallen by 10 percent. e. fallen by 20 percent.
A movement along the AD curve down and to the right is caused by
a. a rightward shift of the money demand curve b. falling consumer confidence c. a decreasing price level d. expansionary open market transactions by the Fed e. a stable price level and increases in consumption, investment, or government spending
With few applicants and several key positions to fill, the owner of a commercial bakery increased the starting wage offered from $12.00 to $15.00 per hour and was able to fill the positions. Which of the following is true of the $12.00 wage rate?
a. The wage is lower than equilibrium. b. The wage is at equilibrium. c. The wage created a surplus. d. The wage attracted just enough workers.
After 1970, the share of federal spending allocated to national defense:
A. declined sharply, while the share allocated to income security increased substantially. B. rose sharply, while the share allocated to income security declined substantially. C. was relatively constant, while the share allocated to income security declined modestly. D. declined modestly, while the share allocated to income security was relatively constant.