An expansionary fiscal policy would be countercyclical if it was enacted after:
A. equilibrium income fell below potential income.
B. unemployment fell.
C. equilibrium income rose above potential income.
D. inflation rose.
Answer: A
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The economic way of thinking stresses that
a. changes in personal costs and benefits generally fail to exert much impact on behavior. b. incentives matter--individuals respond in predictable ways to changes in personal costs and benefits. c. if one individual gains from an economic activity, then someone else must lose and in the same proportion. d. if a good is provided by the government, its production will not consume valuable scarce resources.
Which of the following will be true when the foreign exchange market is in equilibrium and exports exceed imports?
a. The nation is experiencing a trade deficit. b. There will be a net inflow of capital. c. There will be a net outflow of capital. d. The exchange rate value of the domestic currency must rise.
At a taxable income of $40,000 Mari's income tax is $7,400. When her taxable income rises to $45,000 her income tax is $8,400. Based on this information, what is Mari's marginal tax rate?
A) 18.7 percent B) 39 percent C) 10 percent D) 30 percent E) 20 percent
Suppose that country A pegs its currency to that of country B. Now suppose that there is an adverse demand shock in country A. Country B is more likely to cooperate and increase its money supply in response to country A's adverse demand shock when:
A) country B's output is below its preferred level. B) country B is experiencing high rates of inflation. C) country B wants country A to devalue its currency. D) country A is experiencing high rates of inflation.