If the economy is growing beyond potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) the money supply and a decrease in interest rates.
B) government purchases.
C) oil prices.
D) taxes.
Answer: D
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Economic models are often based on assumptions because they:
A) help simplify complex real-world phenomena. B) help explain the past. C) help test models even when relevant data are unavailable. D) help predict the future with higher accuracy. A model is based on an assumption that an additional year of education increases a student's future wage by 20%.
In 2008, Australia had a government budget surplus of $21.7 billion. This budget surplus shifts the demand for loanable funds curve ________
A) leftward and lowers the real interest rate. B) leftward and creates a crowding-out effect. C) rightward and creates a crowding-out effect. D) rightward and creates a Ricardo-Barro effect.
Refer to the figure above. The quota shown in the diagram equals
A) 200 units. B) 500 units. C) 1000 units. D) 1200 units.
Everything else held constant, when the federal funds rate is ________ the interest rate paid on reserves, the quantity of reserves demanded rises when the federal funds rate ________
A) above, rises B) above, falls C) below, rises D) below, falls