Question

1- Which of the following is an example of a fiscal policy action to fight recession?...

1- Which of the following is an example of a fiscal policy action to fight recession?

Select one:

a. decreasing the discount rate

b. decreasing government spending

c. decreasing taxes

d. Federal Reserve buying government securities in the open market

2- 2005 Real Gross Domestic Product (GDP) is the same as

Select one:

a. 2005 GDP adjusted for changes in the price level.

b. 2005 GDP adjusted for depreciation.

c. 2005 nominal (current dollar) GDP.

d. 2005 GDP at 2005 prices.

3- Between June of 2005 and June of 2006 the U.S. dollar fell by about 10% with respect to the Canadian dollar. Who was hurt by this?

Select one:

a. U.S. companies that compete with imports from Canada

b. U.S. companies that export to Canada

c. U.S. tourists traveling to Canada

d. U.S. residents that hold Canadian dollars

4- Which is a feature of the Classical theory?

Select one:

a. Prices and wages are not flexible downward

b. The economy might be at equilibrium with substantial unemployment.

c. If the economy is in a recession, government intervention is necessary to return to full employment.

d. If the economy is in a recession, it will automatically return to full employment.

5- When the United States' unemployment rate is calculated, people who have part-time jobs and are actively seeking full-time jobs are

Select one:

a. counted as unemployed

b. counted as fully employed

c. included in the labor force but not counted as either employed or unemployed

d. counted as a fraction of a fully employed worker at the percentage of a forty hour week that they worked.

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Homework Answers

Answer #1

1. c. decreasing taxes
(Decreasing taxes will increase AD and it wil fight recession.)

2. a. 2005 GDP adjusted for changes in the price level.
(Real GDP is nominal GDP adjusted for price level.)

3. c. U.S. tourists traveling to Canada
(Because they will have to spend more.)

4. d. If the economy is in a recession, it will automatically return to full employment.
(Government intervention is not required.)

5. b.counted as fully employed
(They are counted as fully employed.)

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