A situation in which output decreases while prices increase is often referred to as:
A. inflation.
B. negative economic growth.
C. a recession.
D. stagflation.
Answer: D
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If interest rates in Sweden go up relative to the rest of the world, the
A) demand for Swedish currency will fall. B) demand for Swedish currency will rise. C) supply of Swedish currency will fall. D) supply of Swedish currency will rise.
Which of the following would increase household saving and thus equilibrium investment spending?
a. A reduction in the investment tax credit. b. An increase in the corporate profits tax. c. A decrease in the capital gains tax. d. An increase in the investment tax credit. e. An increase in government regulation.
The government should not attempt to balance the budget if
a. the economy is in a recessionary gap. b. actual GDP is below full-employment GDP. c. unemployment is rising. d. All of the above are correct.
The circular flow diagram divides the economy into:
a. Household sector and business sector. b. Real sector and nominal sector. c. Domestic sector and foreign sector. d. Agricultural sector and non-agricultural sector. e. None of the above is correct.