Due to macroeconomics interdependence between large countries, the effect of a permanent fiscal expansion by Home is as follows: Home output
A) falls, Home's currency appreciates, Foreign output rises.
B) rises, Home's currency appreciates, Foreign output rises.
C) rises, Home's currency depreciates, Foreign output rises.
D) rises, Home's currency appreciates, Foreign output decreases.
E) falls, Homes currency depreciates, Foreign output rises.
B
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Suppose everyone in a town votes that they prefer improved public transportation systems instead of public parks. According to the criteria of independence of irrelevant alternatives that preference should ___________ even if a third option not likely to win, like a public zoo, is included in the vote.
A. stay the same B. change to the median C. change to the average D. change to the majority
From the point of view of a particular country, capital outflows are:
A. purchases of foreign goods or services by domestic households or firms. B. purchases of foreign assets by domestic households or firms. C. purchases of domestic goods or services by foreigners. D. purchases of domestic assets by foreigners.
If an economy is currently operating at its potential level of real GDP, an increase in aggregate demand will
A. increase the price level. B. decrease the price level. C. cause stagflation. D. produce long-run economic growth.
You are hired by the Council of Economic Advisors (CEA) as an economic consultant. The chairperson of the CEA tells you that she believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. She wants to know what policy to pursue to increase aggregate output by $300 billion. The best estimate she has for the MPC is 0.8. Which of the following policies should you recommend?
A. Reduce government spending by $300 billion and increase taxes by $300 billion. B. Increase government spending by $300 billion and reduce taxes by $300 billion. C. Decrease both government spending and taxes by $300 billion. D. Increase both government spending and taxes by $300 billion.