In the rational expectations model a. markets are perfectly competitive and in equilibrium. b. markets may not clear even if wages and prices are otherwise perfectly flexible. c. markets may temporarily be in disequilibrium. d. only anticipated changes in aggregate demand affect output. ANSWER A
Ames and Rosenberg (1963) argue that demand for manufactured goods in the U.S. tended to be utilitarian in nature rather than “high quality,” and this encouraged development of mass production methods. Indicate whether the statement is true or false ANSWER TRUE
Which of the following is true about unemployment? a. the benchmark high-employment level is most likely between 3 and 4 percent b. In recent years, the appropriate benchmark high-employment level has risen. c. Based on the experience of the 1960s, a 7 percent unemployment rate was too low to be sustained without a buildup of […]
Sovereign debt crises are triggered ________. A) by innovations in subprime real estate markets B) when a country’s debt-to-GDP ratio becomes excessively high C) when austerity measures cause a sharp fall in the supply of government bonds D) by the adoption of a common currency, such as the euro ANSWER B
If money demand is not responsive to changes in interest rates, then a. the LM curve is vertical. b. the IS curve determines equilibrium output. c. the LM curve will become horizontal. d. the LM curve will become vertical. e. a and b. ANSWER A
If an economy invests more than it loses through depreciation ________. A) the saving rate will fall B) the saving rate will rise C) the quantity of labor will fall D) the capital stock will expand ANSWER D
The increased willingness of women to enter the workforce has most likely lead to what outcome in the labor market? a. an increase in labor demand and higher real wages. b. an increase in labor supply and higher real wages. c. an increase in labor supply and high real wages. d. a decrease in labor […]
Monetary policy decisions, such as the target growth rate in the money supply or the target level for interest rates, are set by the a. president and congress. b. Federal Reserve Board of Governors. c. Shadow Open Market Committee. d. presidents of the Federal Reserve banks. e. Federal Open Market Committee (FOMC). ANSWER E
Private saving + Government saving equals ________. A) Taxes + Investment B) Output minus Consumption C) Government capital + human capital D) Investment + Net exports ANSWER D
According to Habakkuk (1962), the high price of western lands before the Homestead Act (1862) kept workmen in the eastern manufacturing cities and thus slowed down the rate of adoption of labor-saving technology. Indicate whether the statement is true or false ANSWER FALSE