Answer the following statement(s) true (T) or false (F)
1.Automatic stabilizers can counter a major recession on their own.
2.During typical economic conditions, automatic stabilizers are more likely to help than discretionary expansionary or contractionary fiscal policy.
3.Budget deficits give the government flexibility to deal with crisis situations.
4.The largest budget deficits are usually created during wars.
5.Economists often look at the ratio of national debt to GDP.
1.false
2.true
3.true
4.true
5.true
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Suppose that Canada pegs its currency to the U.S. dollar at a rate of $C1 = $US1 and that Canada is a major exporter of crude oil to the United States. The increase in the price of oil that occurred in the second half of 2007 is likely to:
A) cause Canada to adopt a contractionary monetary policy and the United States to adopt an expansionary monetary policy. B) cause Canada to adopt an expansionary monetary policy and the United States to adopt a contractionary monetary policy. C) cause both Canada and the United States to adopt contractionary monetary policies. D) cause both Canada and the United States to adopt expansionary monetary policies.
A sandwich shop lowers the price of tuna sandwiches. The shop suddenly sells more tuna sandwiches than usual. Which of the following does this change in sales show?
A. Substitution effect B. Income effect C. Law of demand D. Law of supply