Assume the economy is in short-run equilibrium at a real GDP below its potential real GDP. According to Keynesian theory, which of the following policies should be followed?
a. The Federal Reserve should increase the money supply.
b. All of the answers are correct.
c. The federal government should do nothing because the economy will self correct to potential real GDP.
d. The federal government should increase spending.
d
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"Scarcity implies that some way of rationing goods must be found." Explain what this statement means. How is this rationing done?
What will be an ideal response?
An increase in the capital-labor ratio is associated with
a. innovations b. a decrease in the capital-output ratio c. an increase in the capital-output ratio d. capital deepening e. technological improvement
If M doubled and V fell by 50%, what would happen to PQ?
What will be an ideal response?
Balance of payments surpluses arise whenever the exchange rate is pegged at an artificially low level.
Answer the following statement true (T) or false (F)