The behavior of investment and real GDP in the United States after the 1990s
A) is not consistent with the two-period model with production.
B) is consistent with the effects of an increase in the government deficit in the two-period model with production.
C) is consistent with the effects of an increase in optimism about future total factor productivity in the two-period model with production.
D) is consistent with the effects of a decrease in the government deficit in the two-period model with production.
C
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Britain's 1992 recession is probably the result of:
A) the struggle to reconcile monetary and fiscal policy. B) the adherence to the ERM, which required Britain to raise interest rates to maintain exchange parity. C) high unemployment rates, which are a product of the generous welfare system. D) poor planning for the conversion to the euro.
When economists talk about the gains from trade they mean that
A) no one ever gets hurt by trade. B) the benefits of trade outweigh the losses. C) business firms benefit from trade but not necessarily individuals. D) trade increases government revenue through taxes on imports. E) economic restructuring is usually quick and painless.