If the Fed wants to try to stimulate the economy, ________
A) it lowers spending
B) it lowers its short-run interest rate target
C) it increases tax rates
D) it reduces money supply
Answer: B) it lowers its short-run interest rate target
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“Assume that all individuals have perfect information about prices now and in the future, that they have identical tastes, that all markets are competitive, and that there is no government." This statement is an example of how economists
A. apply the law of supply and demand. B. employ marginal analysis. C. are prevented from getting correct answers. D. ignore reality. E. use unrealistic assumptions to develop theory.
Most of the taxes collected by governments tend to
a. remain fixed. b. move in the opposite direction from GDP. c. be sales taxes. d. rise and fall with the level of GDP.
Which of the following countries offered bailouts for the weaker economies in the European Union during the economic downturn?
A. Spain and Greece B. Germany and France C. France and Spain D. Italy and Germany
When a perfectly competitive, well-functioning market is in equilibrium:
A. deadweight loss is zero. B. total surplus is maximized. C. the market is efficient. D. All of these are true.