The debate over how the government should respond to deep economic downturns may be easier to overcome if we focus on infrastructure spending because:
A. we have resolve the debate over infrastructure spending before we do anything else.
B. there's broad agreement that the government should increase infrastructure spending.
C. insufficient infrastructure spending is the root cause of most economic downturns.
D. there's broad agreement that the government should decrease infrastructure spending.
Answer: B
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The Keynesian contention that the short-run aggregate supply curve is horizontal is based on the assumption that there are
A) flexible prices. B) real prices. C) upward sloping prices. D) sticky prices.
Negative externalities, such as air pollution, pose a social problem because they
a. benefit buyers but not sellers b. are intended and are market derived c. have a positive value for those who create them d. have a negative value for those who create them e. are difficult to internalize
Which is not a reason the demand curve for loanable funds slopes down?
A. The value of the MRP in terms of today’s money shrinks as the interest rate rises. B. Future returns must be discounted more when the interest rate rises. C. As the interest rate rises, more and more investments become unprofitable. D. Production becomes more profitable in the future, reducing required inputs today.
Empirical research suggests that the steepness of the aggregate supply curve depends on the
A. size of the multiplier. B. interest rate. C. level of wage rate. D. amount of excess capacity in the economy.