The two ways in which deficit spending can impose a burden on future generations are A) by requiring future generations to face lower government spending and to utilize a smaller stock of human capital. B) by requiring future generations to face higher taxes and to work with a lower accumulated stock of capital goods. C) […]
From 1950 until the late 1980s, the natural rate of unemployment in the United States A) trended upward. B) fell sharply as government retraining programs helped put the unemployed back to work. C) cycled up and down in tandem with the actual rate of unemployment. D) rose sharply, always exceeding the actual rate of unemployment. […]
To compensate for the possibility of indirect crowding out, a government engaging in expansionary policy aimed at eliminating a recessionary gap could A) reduce taxes rather than increase government spending. B) increase spending less than the simplest Keynesian model would predict. C) both reduce taxes and reduce spending to be able to achieve full employment. […]
The relationship between the quantity of money balances demanded and the interest rate is A) contractionary monetary policy. B) determined by open market operations. C) negative. D) the reserve requirements. ANSWER C
Of the items in the following lists, which go from most liquid to least liquid? A) a house, a six-month certificate of deposit, shares of stock, a checking account B) a checking account, a certificate of deposit, shares of stock, a house C) a checking account, a house, a six-month certificate of deposit, shares of […]
The quantity theory of money implies that over the long run, the inflation rate will ________. A) equal the nominal interest rate B) equal the growth rate of M2 minus the growth rate of real output C) equal the growth rate of M2 plus the growth rate of real output D) equal the velocity of […]
From the late 1980s to 2000, the natural rate of unemployment A) fluctuated up and down, following the path of the actual rate of unemployment. B) gradually declined. C) climbed sharply. D) held constant. ANSWER B
An arrangement that allows buyers and sellers to exchange things is called A) a market. B) a contract. C) money. D) efficient. ANSWER A
If the depreciation rate in an economy is 10%, and the capital stock in the economy is $1,000, the level of investment required to keep the economy at a steady state is equal to: A) $110. B) $1,000. C) $250. D) $100. ANSWER D
Because resources are limited A) people must make choices. B) firms will be forced out of business. C) only the very wealthy can get everything they want. D) the availability of goods will be limited but the availability of services will not. ANSWER A
