According to monetarists, the natural rate theory a. denies the tradeoff between inflation and output. b. argues that there is a stable tradeoff between inflation and output. c. shows that activist policies work best. d. believes that the Phillips curve relationship breaks down when policymakers attempt to use it. ANSWER D
In an open economy, there should be a a. close positive relationship between investment and savings. b. a close positive relationship between trade deficits and investment. c. a negative relationship between trade deficits and savings. d. a positive relationship between a country’s savings rate and higher domestic interest rates. ANSWER C
Economic history shows that stock market averages are useful predictors of the future. Indicate whether the statement is true or false ANSWER FALSE
At the start of the Civil War, the population in the U.S. was about half that of the United Kingdom. Indicate whether the statement is true or false ANSWER FALSE
The BP schedule will be steeper the a. more responsive capital flows are to the interest rate. b. less responsive capital flows are to the interest rate. c. smaller the marginal propensity to import. d. less likely an expansionary fiscal policy will lead to a balance of payments deficit. ANSWER B
Information and opportunity costs affected patterns of emigration to the U.S. Indicate whether the statement is true or false ANSWER FALSE
According to Edward Denison, during the 1929-1982 period, real output grew at an annual rate of a. 1.4 percent. b. 0.6 percent. c. 2.9 percent. d. just below 1 percent. e. exactly one-half percent. ANSWER C
The Great Depression and the New Deal transformed the U.S. into which type of economy? (a) Laissez-faire (b) Socialist (c) Mixed (d) Communist ANSWER (c)
Which of the following did not occur during the early years of the Great Depression? (a) Marriage rates fell. (b) Birth rates fell. (c) Divorce rates increased. (d) Actually, all of the above occurred. ANSWER (c)
The years after 1960 witnessed some social and economic changes of extraordinary magnitude, including all of the following except (a) The core of U.S. growth shifted away from its historic base in heavy industry. (b) A huge influx of women into the labor force occurred. (c) Legislation provided for greater safety on the job and […]
