In the United States during the 1960s, government spending dramatically increased to fight the Vietnam War, which resulted in:
a. demand-pull inflation.
b. cost-push inflation.
c. a disinflationary recession.
d. stagflation.
QUESTION 2The demand curve for money:
a. shows the amount of money balances that individuals and businesses wish to hold at various levels of private investment.
b. reflects the open market operations policy of the Federal Reserve.
c. shows the amount of money that households and businesses wish to hold at various rates of interest.
d. indicates the amount that consumers wish to borrow at a given interest rate.
QUESTION 3The government's chief forecasting gauge for business cycles is the:
a. unemployment rate.
b. real GDP.
c. personal income index.
d. index of leading indicators.
QUESTION 4An increase in the price level caused by a rightward shift of the aggregate demand curve is called:
a. cost-push inflation.
b. supply shock inflation.
c. demand shock inflation.
d. demand-pull inflation.
QUESTION 5Which of the following explains why the demand for money curve has an inverse relationship between the interest rates and the quantity of money demanded?
a. As the interest rate rises, the opportunity cost of holding money rises, and people respond by converting cash or checking account balances into interest-bearing financial investments.
b. As the interest rate rises, people find it advantageous to borrow money, which increases the quantity of money demanded.
c. As the interest rate falls, the opportunity cost of holding money rises, and people respond by converting cash or checking account balances into interest-bearing financial investments.
d. As the interest rate rises, the demand for money curve shifts outward to the right.
QUESTION 6Which of the following is a leading business cycle indicator?
a. The unemployment rate.
b. The volume of outstanding commercial loans.
c. New building permits.
d. Personal income.
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