According to the graph shown, the consequence of expansionary fiscal policy is:
A. inflation.
B. deflation.
C. a greater level of potential output.
D. a lower level of potential output.
A. inflation.
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Other things the same, a decrease in the price level motivates people to hold
a. less money, so they lend less, and the interest rate rises. b. less money, so they lend more, and the interest rate falls. c. more money, so they lend more, and the interest rate rises. d. more money, so they lend less, and the interest rate falls.
Two products are complements if:
A. a decrease in the price of one causes buyers to demand less of the other. B. an increase in the price of one causes buyers to demand more of the other. C. a decrease in the price of one causes buyers to demand more of the other. D. individuals consume the goods together.
Which would be characteristic of a capitalist economy?
a. Reliance on international treaties. b. Competition and unrestricted markets c. Democracy d. Government ownership of the factors of production
A liquid trap can be avoided if the central bank:
A. charges banks fees for keeping reserves. B. pays interest on bank deposits at banks. C. pays interest on reserves. D. charges banks fees for making loans.