Which of the following best describes the idea of a political business cycle?
A. Politicians have a bias to cut taxes and increase government spending.
B. Special interests result in alternating federal deficits.
C. Politicians will use fiscal and monetary policy to cause output, real incomes, and employment to be rising prior to elections.
D. Good intentions of politicians influence the business cycle.
Answer: C
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If a recession in the United Kingdom causes a reduction in British imports and an economic boom in the United States causes an increase in U.S. imports, these events will most likely cause the British pound to ________ and the U.S. dollar to ________.
A. depreciate; depreciate B. appreciate; depreciate C. depreciate; appreciate D. appreciate; appreciate
The table above gives data for the nation of Pearl, a small island in the South Pacific. If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level, the new equilibrium real GDP is
A) $34 billion. B) $31 billion. C) $28 billion. D) $25 billion. E) $23 billion.
You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n) a. luxury good
b. inferior good. c. normal good. d. complementary good.
Which of the following is an example of signaling?
a. Pat is considering the purchase of a used car. Before making the purchase he has the car checked by an auto mechanic. b. Zach is applying for a new life insurance policy. Before writing the policy, the insurance company requires Zach to be examined by a doctor. c. Denise is applying for a new job. Before hiring her, the firm requires Denise to take a drug test. d. Marcus is planning to ask for Chaquila's hand in marriage. Before asking her, he buys her a box of her favorite chocolates and takes her to dinner at her favorite restaurant.