When an economy dips into recession, automatic stabilizers will:
a. enlarge the budget deficit (or reduce the surplus).
b. reduce the budget deficit (or increase the surplus).
c. ensure that the budget remains in balance.
d. expand the supply of money and, thereby, stimulate aggregate demand.
a
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Explain the potential downfalls of the Fed implementing an expansionary monetary policy or contractionary monetary policy at the wrong time
What will be an ideal response?
The neoclassical growth theory implies that
A) the marginal product of capital is low in poor countries. B) the rate of return on capital is low in poor countries. C) there should be large flows of capital from rich countries to poor countries. D) all of the above.
The term cross-price refers to the idea that:
a. the price of one good is affecting the quantity demanded of a different good. b. the demand of one good is affecting the quantity demanded of a different good. c. the price of one good is affecting the quantity supplied of a different good. d. the supply of one good is affecting the quantity demanded of a different good.
What is demand?
A) The idea that buyers will purchase more of a product as the price drops B) The price and quantity of a product at which the quantity demanded is equal to the quantity supplied C) The idea that producers will offer more of a product as the price rises D) The willingness and ability of buyers to purchase a product E) None of these