Suppose you are a member of the Council of Economic Advisors and you are trying to get the US economy out of a recession and increase RGDP. What Keynesian macroeconomic policy could be advised to the government?
a. reduce the tax rate and increase government spending (expansionary fiscal policy)
b. raise the tax rate and reduce government spending
c. reduce government spending
d. raise the tax rate
Answer: a. reduce the tax rate and increase government spending (expansionary fiscal policy)
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Which of the following will increase aggregate demand in the United States?
a. A higher price level. b. An increase in the real interest rate. c. An increase in wealth due to a substantial appreciation in the value of stocks. d. A decrease in real income in Japan and Western Europe.
If you agree to a long-term loan at a specified nominal rate of interest and inflation turns out to be higher than was anticipated,
A) the nominal rate of interest falls. B) the nominal rate of interest rises. C) the real rate of interest falls. D) the real rate of interest rises.
Recall the Application about how having car insurance affects driving behavior to answer the following question(s).Recall the Application. Based on the results of studies mentioned in the Application, what should we do with mandatory/compulsory insurance?
A. We should conduct more studies to compare the benefits of fully insured vehicles to the costs, including the increase in fatalities on more hazardous roads. B. We should ban all insurance because mandatory insurance results in more fatalities. C. We should allow mandatory insurance, but the government should pay for it. D. We should ban driving altogether, to decrease automobile deaths.
Which of the following people are liquidity providers?
A. Used car salesman B. Antiques dealer C. Bank teller D. All of these are considered liquidity providers.