Classical economists believe that the economy tends naturally toward
a. full employment and zero inflation equilibrium without government interference
b. zero unemployment and zero inflation as long as the Federal Reserve keeps interest rates low
c. high unemployment unless the Federal Reserve constantly adjusts the money supply
d. high inflation unless the government curbs its spending habits and cuts tax rates to spur economic activity
e. monetary equilibrium as long as money velocity is less than one
A
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In the figure above, if the exchange rate is equal to 2 Canadian dollars per U.S. dollar, there is a ________ of ________currency and the exchange rate will________
A) surplus; domestic; fall B) surplus; foreign; fall C) surplus; domestic; rise D) shortage; domestic; fall
A tax is progressive if the average tax rate
A) increases as income increases. B) increases as income decreases. C) is negative. D) is positive.