A laissez faire policy approach during a recession would advocate
A. Increasing AS by funding programs that improve worker skills.
B. Increasing AD by increasing government spending.
C. Noninterference by the government.
D. Increasing both AD and AS.
Answer: C
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Braun and Evans found that
A) the measured Solow residual varied sharply over the seasons. B) electricity use by producers rises sharply in economic upturns. C) professional forecasters have rational expectations of inflation. D) shocks to fiscal policy are the main source of business cycle fluctuations.
Which of the following is correct?
A. SMC = PMC - MD B. MPB = MSB + MEB C. SMC = PMC + MD D. MSC = MPB E. MSB = MSC + MPB
If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Eddie has a comparative advantage in producing milk shakes.
Answer the following statement true (T) or false (F)