Under what circumstances is it most clear that the government should pursue neither fiscal nor monetary policy?
A. The economy is experiencing deflation
B. The economy is below potential output
C. Unemployment rate exceeds the target rate of unemployment
D. There is no inflation and the unemployment rate equals the target rate of unemployment
Answer: D
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A British investor buys $40,000 worth of stocks in the U.S. stock market. For the U.S. we would predict ________.
A. aggregate demand will fall B. aggregate supply will rise C. aggregate demand will rise D. aggregate supply will fall
Other things the same, if the expected return on U.S. assets increases, the
a. supply of dollars in the market for foreign-currency exchange shifts right. b. supply of dollars in the market for foreign-currency exchange shifts left. c. demand for dollars in the market for foreign-currency exchange shifts right d. demand for dollars in the market for foreign-currency exchange shifts left.
Existing firms in the rental car industry will stay in the industry but will not want to undertake any investment projects other than to replace depreciating capital stock if the normal rate of return in the industry is ________ and the return that firms earn in this industry equals exactly ________.
A. 6%; 6% B. 4%; 7% C. 1%; 2% D. 12%; 9%
The cost of producing an additional unit of a good or service that is borne by the producer of that good or service
A) always equals the benefit the consumer derives from that good or service. B) equals the cost borne by people other than the producer. C) is the marginal private cost. D) is the external cost. E) is the marginal social cost.