Total income in an economy is equal to
A) GDP minus net exports.
B) income minus taxes.
C) the sum of wages, interest, rent, and profit.
D) firm revenues.
Answer: C
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The impact of monetary policy on the cost of capital is emphasized by
A) supply-side economists. B) Monetarists. C) Keynesians. D) rational expectations theorists.
Which of the following is FALSE concerning the long run?
A) Economists believe that fiscal and monetary policies have no permanent effects on the economy. B) Economists more or less agree that the economy tends to fluctuate around the level that is consistent with full employment. C) In the long run, the unemployment rate returns to its normal level. D) The current account must tend toward balance in the long run. E) None of the above.
If something is used as a medium of exchange, then a necessary condition is that it must be
a. a precious metal, such as gold or paper money b. convertible into gold c. used in barter exchange d. in abundant supply e. accepted by those using it as payment for any purchase
If the U.S. government were to run a substantial budget deficit, what would be the effects on the economy under the new classical view?