Suppose the Fed decreases the money supply. In response households and firms will ________ short term assets and this will drive ________ interest rates
A) buy; up
B) buy; down
C) sell; up
D) sell; down
Answer: C
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Which of these is NOT a potential source of inefficiency?
A) external benefits B) increasing marginal costs C) monopoly D) subsidies
The argument that a tariff has to be imposed in order to protect any industry just getting started until it gets large enough to be competitive internationally is the
A) start-up industry argument. B) infant industry argument. C) baby industry argument. D) fledgling industry argument.
The economy is considered to be at full employment when
a. structural unemployment is zero b. frictional plus structural unemployment is less than the natural rate c. the leading economic indicators are unchanged for two consecutive quarters d. the actual rate of unemployment equals the natural rate e. the unemployment rate is zero
When aggregate demand shifts because of expansionary fiscal policy, then the impact of the fiscal policy for:
A. increasing GDP will be weakened if crowding out occurs. B. decreasing GDP will be strengthened if crowding out occurs. C. increasing GDP will be weakened by an increase in the price level. D. increasing GDP will be strengthened by the decrease in the price level.