Why might an expansion in government spending increase the severity of the coordination problem during a recession?
a. Increases in government spending will not affect the composition of aggregate demand.
b. Congress is unlikely to approve increases in government spending during a recession.
c. Spending increases will be driven by political considerations and will often flow into areas where resources are already fully employed.
d. Government spending can be counted on to flow toward high productivity projects.
C
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An example of a voluntary export restriction is a:
A) U.S.-imposed limit on the total number of Honda automobiles imported from Japan. B) regulation specifying that each imported Honda automobile must meet certain emission- exhaust guidelines. C) decision by Japan to ship fewer Japanese-built Hondas to the United States. D) tax of 10 percent of the value of each Honda automobile imported from Japan.
A futures contract is
A) an agreement that specifies the delivery of a commodity or financial instrument at an agreed-upon future date at a currently agreed-upon price. B) an agreement that specifies the delivery of a commodity or financial instrument at an agreed-upon future date, with the price to be negotiated at the time of delivery. C) an agreement that specifies the delivery of a commodity or financial instrument at a currently agreed-upon price, with date of delivery to be negotiated subsequently. D) an agreement that specifies the delivery of a commodity or financial instrument, with the price and date of delivery to be negotiated subsequently.