Consumer confidence in the economy falls, and as a result, aggregate demand decreases. As real GDP falls below potential GDP, if the Fed followed Friedman's k-percent rule, the Fed would
A) increase the quantity of money more than usual.
B) continue allowing the quantity of money to grow at "k" percent.
C) increase government expenditures.
D) lower the federal funds rate.
E) raise the federal funds rate.
B
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When new firms are encouraged to enter a monopolistically competitive market
A) some existing firms must be earning economic profits. B) the demand curve facing an existing firm shifts to the right. C) they do so because there is insufficient product differentiation. D) the marginal cost curve facing an existing firm shifts downwards.
Which of the following statements is true?
A) Nations have generally moved toward freer international trade policies over the past few decades. B) Nations all over the world have recently raised trade barriers. C) Eastern Europe and the Former Soviet Union countries have reduced trade in the last couple of decades. D) NAFTA lowered trade barriers between the United States and Mexico but raised them between the United States and Canada.
An example of contractionary fiscal policy would be
a. cutting taxes b. decreasing government spending c. increasing production of consumer goods d. expanding the governments role in regulating private industry
C4 and HHI tend to ________ the concentration in a domestic industry.
A. overstate B. understate or overstate, depending on the true geographic market C. understate D. provide different rankings of