If speculation is that a recession is around the corner, which means that our future incomes will most likely fall, then the effect of all this on the economy now will be
a. an upward movement along the AD curve
b. a downward movement along the AD curve
c. the AD curve shift to the left
d. the AD curve shift to the right
e. the AS curve shift to the right
C
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External shocks to an economy include:
A. Innovation, population growth, and spending behavior. B. Disruptions in trade, wars, and natural disasters. C. Tax policy, government spending, and the availability of money. D. Jobs, prices, and growth.
A repurchase agreement of government securities by the Fed
A) permanently increases bank reserves. B) temporarily increases bank reserves. C) permanently reduces bank reserves. D) temporarily reduces bank reserves.
Supply and demand provides the basic explanatory framework for constructing both microeconomic and macroeconomic models
a. True b. False Indicate whether the statement is true or false
Critics of the Keynesian view argue that increases in government spending financed by borrowing will hamper the recovery from a recession and slow long term growth because
a. more spending and debt will lead to higher future taxes to cover the cost of government and the interest on the debt. b. government spending is directed by political forces, rather than efficient cost-revenue comparisons. c. more political spending will lead to more wasteful rent-seeking activities and less production of goods and services that people value. d. All of the above are true.