To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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Refer to the table above. If Beth earns $60,000 per annum, she has to pay a tax of ________
A) $9,464.50 B) $1,600.50 C) $1,000.50 D) $24,000
If you put $2,000 in a saving account that earns 3% interest per year, what is the formula you should use to determine the account's future value in one year?
A) Future value = $2,000 × 0.03. B) Future value = $2,000 / 0.03. C) Future value = $2,000 / (1 + 0.03). D) Future value = $2,000 × (1 + 0.03).
Per capita income growth is measured by
a. income growth – population growth b. income growth × population growth c. income growth/population growth d. income/population e. income growth + population growth
According to the AS/AD model, if the economy is in a recession and the Fed wants to increase output and employment, it should:
A. raise reserve requirements. B. act to increase the money supply. C. act to decrease the money supply. D. raise interest rates.