When economists refer to an economy's price level, they indicate:
a. the rate of inflation in that economy
b. the prices of goods and services relative to consumers' incomes.
c. a composite measure of prices of all goods and services.
d. a period of level, or steady, prices in that economy.
e. the price of a specific consumer good.
c
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The exchange rate that is established in the absence of foreign exchange market intervention by the government is known as a(n):
a. historical anachronism. b. fixed exchange rate. c. "dirty float" exchange rate. d. unmanaged exchange rate. e. free market equilibrium exchange rate.
The government wishes to close a recessionary gap by increasing national income by $700 billion. The MPC = 0.8 . Two policies are offered. Policy A calls for $180 billion in increased government spending and $50 billion in increased taxes. Policy B calls for $200 billion in increased government spending and $100 billion in increased taxes. Which of the following will increase the national income
by the desired $700 billion? a. Both policies increase national income by $700 billion but Policy B offers a lower budget deficit. b. Both policies increase national income by $700 billion and create equal budget deficits. c. Neither policy increases national income by $700 billion. d. Only Policy A increases national income by $700 billion. e. Only Policy B increases national income by $700 billion.