The classical model predicts that, in the short-run, a tax cut financed by an increase in the money supply would a. leave output and the price level unchanged. b. increase the price level but leave output unchanged. c. increase output but and reduce the price level. d. increase output and the price level by increasing […]
When an economy experiences a one-time increase in productivity, there is an immediate increase in ________. A) the saving rate B) the capital-labor ratio C) the depreciation rate D) consumption per worker ANSWER D
The U.S. economy experiences a public debt when the value of its annual deficits exceeds the value of its annual surpluses over an extended period of time. Indicate whether the statement is true or false ANSWER TRUE
According to supply-side theory, if one starts from a balanced budget, a cut in taxes will tend to cause ________. A) a budget deficit B) no change in the federal government budget C) a decrease in aggregate supply and an increase in aggregate demand D) a budget surplus ANSWER D
According to the Taylor rule, when inflation and/or output is above its target, then: a. the federal funds rate must be negative. b. the federal funds rate must be above its target. c. the federal funds rate must be above inflation. d. none of the above are correct. ANSWER C
Which of the following models view changes in real supply-side factors as determinants of short-run fluctuations in output and employment? a. New classical models b. Political business cycle models c. Keynesian models d. Real business cycle models e. none of the above ANSWER D
Evidence of a negative correlation between income per capita and population growth rates ________. A) implies that birth control is most effective in low-income countries B) has not been found in the available data C) is consistent with the Solow model D) suggests that population growth stimulates technological progress ANSWER C
The Fisherian version of the quantity theory equation is a. MV = Py. b y = c + i + g. c. M = kPy. d. s = i + (g – t). ANSWER A
Consumers of most goods usually experience diminished satisfaction in each additional unit consumed. However, when variety appears endless, this may not be the case. Consider manufactured goods between 1890 and 1910. Indicate whether the statement is true or false ANSWER TRUE
Those individuals who rejected the U.S. tariff policy of the antebellum period did so for which of the following reasons? They (a) Wanted to save domestic jobs in those industries reliant on imports. (b) Depended on imports for domestic production. (c) Wanted to protect relatively low consumer prices, advance free trade and boost economic efficiency. […]
