Because there is a trade-off between inflation and unemployment in the short run,
A. lower unemployment will typically cause inflation to fall.
B. policies designed to reduce unemployment will typically set off a recession.
C. policies designed to reduce inflation will cause unemployment to fall as well.
D. higher inflation will generally be associated with higher unemployment.
E. lower inflation will generally be associated with higher unemployment.
Answer: E
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This year, Tyrone earned a total of $9,000 . As a result, he received $9,000 less in government transfers. Therefore, his implicit marginal tax rate is
a. zero. b. 25 percent. c. 50 percent. d. 100 percent.
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and the monetary base in the context of the Three-Sector-Model? a. The GDP Price Index rises and monetary base
falls. b. The GDP Price Index and monetary base fall. c. The GDP Price Index falls and monetary base rises. d. The GDP Price Index and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.