Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and wages and prices are rising
If contractionary policy is used to move the economy back to long run equilibrium, this would be depicted as a movement from ________ using the static AD-AS model in the figure above.
A) D to C B) A to E C) C to B D) B to A E) E to A
C
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The increase in the currency ratio during World War II was due to
A) bank panics. B) a drop in the rate of interest paid on checking deposits. C) the spread of ATMs. D) high taxes and illegal activities.
Explain how a decrease in housing prices may reduce the wealth of some while increasing the wealth of others. What effect would this have on aggregate consumption?
What will be an ideal response?
Output per person must be ________ output per worker.
A. greater than or equal to B. no more than half the size of C. equal to D. less than or equal to
The idea that if governments cut taxes but not spending, people will not change their behavior, and expansionary policy will have little expansionary effect is known as:
A. Keynesian policy. B. Ricardian equivalence. C. the invisible hand. D. Stimulus policy.