In response to changing inventories in Figure 9.8, if the economy produces at full employment of $400 billion, firms will attempt to
A. Increase employment and buy more machinery.
B. Increase employment and buy less machinery.
C. Reduce employment and buy less machinery.
D. Reduce employment and buy more machinery.
Answer: C
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Recent changes in methods used to compute the CPI have made the
a. upward bias in the CPI inflation rate more severe than it used to be. b. upward bias in the CPI inflation rate less severe than it used to be. c. downward bias in the CPI inflation rate more severe than it used to be. d. downward bias in the CPI inflation rate less severe than it used to be.
Refer to Figure 2-15. One segment of the circular flow diagram in the figure shows the flow of wages and salaries from market K to economic agents M. What is market K and who are economic agents M?
A) K = product markets; M = firms B) K = factor markets; M = firms C) K = product markets; M = households D) K = factor markets; M = households
The fact that business cycles are recurrent but not periodic means that
A) business cycles occur at predictable intervals, but do not last a predetermined length of time. B) the business cycle's standard contraction—trough—expansion—peak pattern has been observed to occur over and over again, but not at predictable intervals. C) business cycles occur at predictable intervals, but do not all follow a standard contraction—trough—expansion—peak pattern. D) business cycles last a predetermined length of time, but do not all follow a standard contraction—trough—expansion—peak pattern.
If the economy is in an inflationary gap, which of the following is the least appropriate policy mix?
a. a budget surplus and expansionary monetary policy b. a budget deficit and expansionary monetary policy c. a budget deficit and contractionary monetary policy d. a budget surplus and contractionary monetary policy