According to Keynes, which of the following should the government do when the economy overheats?
A. Practice laissez faire policies.
B. Raise taxes.
C. Employ more people.
D. Increase spending.
Answer: B
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Describe the structure of the Fed's Open Market Committee (FOMC). What is this committee's primary responsibility?
What will be an ideal response?
Based on the neoclassical theory of investment, which aspect of a booming economy helps to explain the procyclicality of investment?
A) Tax revenues are likely to be rising. B) The real interest rate is likely to be rising. C) Capital goods are becoming more expensive. D) Financing constraints are likely to be relaxed for many businesses.
Keynesians identify three principal motives for demanding money. They are the
a. transactions motive, precautionary motive, and liquidity motive b. transactions motive, precautionary motive, and convertibility motive c. transactions motive, speculative motive, and volatility motive d. transactions motive, speculative motive, and liquidity motive e. transactions motive, speculative motive, and precautionary motive
Which of the following can a country increase in the long run by increasing its money growth rate?
a. the nominal wage. b. real output. c. real interest rates. d. the real wage.