4. From a long-run perspective, the best way to get the economy out of a recessi

Question

4. From a long-run perspective, the best way to get the economy out of a recession is
a. to increase government purchases or reduce net taxes.
b. to decrease government purchases or increase net taxes.
c. for the Federal Reserve to increase the supply of financial capital.
d. for the Federal Reserve to decrease the supply of financial capital.
e. to do nothing.

12. Monetary policy is reduced in its effectiveness to expand a sluggish economy when
a. Congress does not change the target Federal Funds rate.
b. the Federal Reserve decides not to change rates on bank loans.
c. banks don't want to make loans.
d. business confidence for investment purchases is strong.
e. the President forbids the FOMC to pursue contractionary policy.
13. From a long-run perspective, a sluggish economy occurs because
a. fiscal policy is not active enough.
b. monetary policy is not active enough.
c. trade policy is not active enough.
d. the nominal wage rate is too high.
e. the nominal wage rate is too low.
15. Following the Theorem of Comparative Advantage, a key goal of the
European Union has been to
a. maximize the revenue earned by governments through trade quotas.
b. maximize the profits of producers by imposing tariffs on manufactured goods.
c. lower or eliminate barriers to trade among member nations.
d. ensure positive Balance of Trade positions among member nations.
e. ensure zero Balance of Trade positions among member nations.
29. Which of the following changes would NOT shift the LAS curve rightward?
a. an increase in labor productivity.
b. an increase in consumption.
c. an increase in the labor force.
d. an increase in the capital stock.
e. an increase in attitudes toward work.

Explanation / Answer

4. A

12. B

13. B

15.C

29. E

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