Keynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to
A) do nothing, because the economy is self-adjusting.
B) raise government spending, thereby increasing aggregate demand and pushing up real Gross Domestic Product (GDP) with little or no inflationary consequences.
C) increase taxes, thereby causing aggregate demand to increase and inducing a rise in real Gross Domestic Product (GDP) with little or no inflationary consequences.
D) reduce the money stock, thereby causing aggregate demand to decrease and inducing a rise in fall in the price level that generates an increase in total planned expenditures.
B
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When prices rise, the purchasing power of money
A) rises. B) falls. C) is unaffected. D) may rise, fall, or be unaffected depending upon circumstances.
After the point of diminishing marginal returns
A) marginal product rises. B) production should stop. C) marginal product falls. D) marginal product shifts from negative to positive.
A government's policy to lower the exchange rate is called ____________
a. an import control b. sinking a floating exchange rate c. appreciating the currency d. floating the exchange rate e. devaluation
The kinked-demand curve is based upon the assumption that an oligopolist's rivals will:
A. follow both a price cut and a price increase. B. follow a price cut, but ignore a price increase. C. ignore a price cut but follow a price increase. D. ignore both a price cut and a price increase.