According to Ricardian equivalence, a long-run impact on the economy occurs when the government ________.
A) lowers taxes
B) issues more government bonds
C) increases spending on capital goods
D) raises taxes
Question 2The struggles and controversies over federal and state powers led to the demise of both the First and Second Bank of the United States.
Indicate whether the statement is true or false
Question 3Which of the following statements is correct? With respect to efficiency wage models,
a. their key element is an explanation of why the efficiency (or productivity) of workers depends on the real wage.
b. the rationale underlying those models implies that firms will set the real wage above the market clearing level.
c. they explain a real wage rigidity.
d. all of the above
Question 4The colonies traded internationally with regions other than the United Kingdom. They included all except
(a) Africa
(b) China
(c) West Indies
(d) Southern Europe
Question 5The Second Bank of the United States was deemed unconstitutional and, therefore, its charter was not renewed.
Indicate whether the statement is true or false
Question 6From the end of the Civil War to the start of World War I, the direction of U.S. trade
(a) stayed the same.
(b) was dominated by trade with Europe.
(c) grew and broadened to include other countries in Asia and the Americas.
(d) dwindled.
Question 7According to Ricardian Equivalence theory, a tax cut ________.
A) will tend to have little economic effect
B) will tend to reduce the magnitude of the trade-off between inflation and the rate of unemployment
C) can be an effective policy tool in the midst of an economic downturn
D) must be used in conjunction with money supply changes over the course of the business cycle
Question 8Bonds sales to finance World War II (194145)
(a) helped finance the government's current budget deficits.
(b) helped finance, manage and eventually pay down the private debts accumulated during
World War I (191418).
(c) were loans the U.S. government made to individuals in its private sector.
(d) led to higher interest rates and decreased private spending and investment.
Question 9If the contribution from capital and labor growth in a given economy equals 4.0 percent and output growth equals 6.4 percent over that same period of time, then productivity growth must equal ________.
A) 25.6 percent
B) 10.4 percent
C) 2.4 percent
D) 1.6 percent
Question 10A liquidity trap occurs when the
a. LM curve is steep.
b. LM curve is vertical.
c. LM curve is relatively flat.
d. IS curve is flat.
Question 11When automatic fiscal stabilizers are in place, a shock that causes a fall in the level of economic activity automatically
a. results in a decline in the federal budget deficit that lessens the fall in income.
b. results in a rise in the federal deficit that lessens the fall in income.
c. requires the federal government to balance the budget.
d. will lead to a permanent increase in the budget deficit.
e. both a and b
Question 12The existence of heavy training costs would provide a rationale for
a. insider-outsider models.
b. IS-LM models.
c. sticky price models.
d. modern efficiency wage models
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