Assumptions that output is fixed and factor prices have adjusted to reach the level of full employment are:
a. useful for long-run analysis.
b. necessary for short-run analysis.
c. unrealistic to the extent that economists should not make such assumptions.
d. always true and therefore useful both in the long run and short run.
Ans: a. useful for long-run analysis.
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The Mint Act of 1792, following the ideas of Thomas Jefferson and Robert Morris, set the U.S. up as
(a) a silver standard country. (b) a paper-money country. (c) a gold-standard country. (d) a bimetallic country.
Which of the following statements is correct regarding the lags in fiscal and monetary policy?
A. The inside lag is the time needed for monetary policy to be effective while the outside lag is the time needed for fiscal policy to be effective. B. The outside lag is the time needed for monetary policy to be effective while the inside lag is the time needed for fiscal policy to be effective. C. The lag for monetary policy is shorter than the lag for fiscal policy. D. The lag for fiscal policy is shorter than the lag for monetary policy.