If stabilization policy has been successful over a periodof time, it is likely t

Question

If stabilization policy has been successful over a periodof time, it is likely that the economy has not seen______.
       any inflation
       severerecessions
       anyunemployment
       a businesscycle


Nominal GDP ______.
       has not been adjustedfor changes in prices over time
       has been adjusted forchanges in prices over time
       is a small or nominalamount of output
       excludes theinternational sector


A closed economy is one which ______.
       only trades with itsneighbors
       trades goods but notservices or assets with other countries
       does not trade goods,services, or assets with other countries
       has a centrallyplanned economy

During a recession ______.
       unemployment and thegrowth rate of real GDP both decrease
       unemployment decreasesand the growth rate of real GDP increases
       unemployment increasesand the growth rate of real GDP decreases
       there is norelationship between unemployment and the growth rate of realGDP

The major difference between the Consumer Price Index andthe Producer Price Index is that ______.
       the PPI is based onretail prices and CPI is based on wholesale prices
       the PPI measures thecost of living of self-employed workers and the CPI measures thecost of living of salaried workers
       the PPI generallyregisters a higher rate of inflation than the CPI
       the PPI is based onthe cost of a basket typically purchased by producers, while theCPI is based on the cost of a basket typically purchased byconsumers

For developed countries, which of the following would beconsidered the most important drive in productivitygrowth?
       educational level ofattainment
       the amount of physicalcapital
       technology
       the abundance ofnatural resources

According to Thomas Malthus's work, which of the followingis true concerning his pessimistic prediction of futureproductivity?
       As population grewso would output per worker.
       The amount ofcapital per worker would fall.
       Technology could becounted on to increase output per worker.
       The amount of landper worker would eventually decline.


Sources of funds for investment spending are______.
       savings byhouseholds, government, and foreigners
       taxes and transferpayments
       always equal to U.S.spending on imports
       directed to theirmost productive uses by the U.S. government

Explanation / Answer

1. Stabilization policy is to combat the severity of recessions andbring about excessively strong expansions. 3. A closed economy in economics is referred to as an Autarky. Inan autarky, said country does not trade with other nations and ifit chooses to become an open economy, it would either becoming animporter or an exporter of a certain good. 4. A recession is classified on the business cycle as the trough ofthe function, so to say. The indicators of a recession are: 1)Inflation is down, 2) GDP Growth rate is increasing as the functionincreases from the lowest point, 3) Unemployment is high. 6. The answer is more than likely technology. Consider thefollowing, a country's PPF (Production Possibilities frontier) willonly attain a point outside the curve through an advancement intechnology in the future. This means that at this point in time,with the amount of resources we have, we cannot reach that point.If the country discovered the technology needed to get to thispoint, the entire curve PPF would shift to the right, causing agrowth in productivity. 7. The answers are a bit misleading. But Thomas Malthus calledeconomics, "the Dismal science." He argued, that as we became moreproductive as producers, we would exhaust our resources andeventually starve to death. 8. Taxes and transfer payments

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