Assume that the economy begins at full employment. Then something happens that brings on a recession. What could that be?
a. a decline in interest rates
b. an increase in govt spending
c. a decline in corporate tax rates
d. an increase in oil prices
Ans: d. an increase in oil prices
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Which of the following could explain why there was a stampede at the Richmond International Raceway where 1,000 laptops were being sold at $50 each?
A) Those who bought laptops at that price were those who valued laptops the most. B) The quantity of laptops demanded at $50 was higher than the quantity supplied. C) The demand for laptops is not very responsive to price. D) The price of $50 per laptop was above the equilibrium price of laptops.
If the long-run real interest rate falls, ________
A) unemployment increases B) investment by firms decreases C) the demand for loans decreases D) investment by firms increases