Answer the following statements true (T) or false (F)
1. The "stimulus package" that the government implemented in response to the Great Recession of 2007-09 made the cyclically-adjusted budget of the U.S. have a very large positive balance in that time period.
2. The so-called "recognition lag" associated with fiscal policy is a result of how slowly the U.S. Congress moves.
3. The concept of a "political business cycle" implies a misuse of fiscal policy making it a source of economic instability.
4. The impact of an expansionary fiscal policy may be strengthened if it crowds out some private investment spending.
1. False
2. False
3. True
4. False
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The above figure shows Jane's budget line and two of her indifference curves. If the price of a lobster dinner falls so that Jane can now purchase the combination represented by Point B, Jane would experience
A) an increase in the opportunity cost of a lobster dinner. B) no change in her marginal rate of substitution. C) an income and a substitution effect. D) Both answers B and C are correct.
Identify four reasons for high entry barriers. Briefly explain each reason
What will be an ideal response?
It seems quite possible that cigarette companies concealed information about the effects of smoking on health, causing cigarette prices to be __________ and cigarette sales to be __________ than would have been the case under symmetric information.
A. higher; higher B. higher; lower C. lower; higher D. lower; lower
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises. b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises. c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same. d. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls. e. There is not enough information to determine what happens to these two macroeconomic variables.