Which of the following statements is correct? a. In both the Keynesian and classical systems, aggregate demand is an important determinant of output and employment b. In classical and monetarist models, money is the primary factor determining changes in aggregate demand. c. Aggregate demand in the Keynesian model is determined entirely by the quantity of […]
One difference between the federal government budget and state and local budgets is that a. deficits in state and local governments average zero over longer periods of time. b. cyclical deficits are zero for state and local governments. c. state and local governments typically run surpluses. d. both a and b. e. none of the […]
A change in government spending has a larger effect on income the a. larger the elasticity of money demand. b. smaller the elasticity of money demand. c. steeper the LM curve. d. flatter the LM curve. ANSWER D
Unlike the Federal Reserve Bank of today, the First and Second Banks (a) could create corporations by special franchise. (b) were generally supported by the rest of the banking community. (c) were direct competitors with private business. (d) provided a federal safety fund in times of well banking crisis. ANSWER (c)
Which of the following statements is correct? a. It is monetary policy and not tax policy that influences interest rates. b. Tax reductions play little role in influencing output. c. Marginal tax rates today are lower than they have ever been in U.S. history. d. Budget deficits show little correlation with interest rates. e. None […]
Compared to the fixed-price/fixed-wage model, in the Keynesian model with a flexible price but fixed wage, an increase in the money stock will cause output to rise by a. less while the interest rate will fall by more. b. less and the interest rate to fall by less. c. more but the interest rate to […]
Forcing businesses to divert profits to improve job conditions, increase wages and salaries and broaden benefits fuels animosity toward labor unions. Indicate whether the statement is true or false ANSWER TRUE
Under the new Constitution in 1789, the states gained the sovereign power to (a) levy taxes. (b) power and issue money. (c) “regulate” the value of money. (d) create corporations by special franchise. ANSWER (d)
During the Great Depression we observed: a. higher prices. b. higher real wages. c. lower output. d. higher money wages. e. both b and d. ANSWER E
To understand how the colonial economy developed, Hughes and Cain (2011) claim one must understand (a) what motivated colonists to settle in different locations. (b) what colonists produced, how much they produced, for whom they produced and with whom they traded. (c) the legal system in which they operated. (d) all of the above. […]
