The Lucas supply function states that real output can change from its fixed level
A. only if there is a positive price surprise.
B. only if there is a negative price surprise.
C. only if there is no price surprise.
D. Both A and B are possible.
Answer: D
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Suppose the Fed purchases $100 million of U.S. government securities from the public. How will this affect the money supply and the national debt?
a. The money supply will increase; the national debt will decline. b. The money supply will decline; the national debt will increase. c. The money supply will increase; the national debt will be unaffected. d. The money supply will decrease; the national debt will be unaffected.
How does human specialization contribute towards increasing an economy's output?
A. It exploits the differences in abilities B. It is a process of creative destruction C. It pushes each worker to master the whole product D. It encourages people to be "jacks-of-all-trades"