The essence of the trade-off between equality and efficiency is that
A. taxes and transfers reduce incentives to earn income, thus reducing GNP.
B. people are ideologically opposed to socialistic income redistribution.
C. redistribution violates the “work ethic.”
D. people are prejudiced against blacks and women.
Answer: A
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When there is a permanent fall in the domestic money supply, the exchange rate:
a. falls in the short run and rises slightly in the long run. b. falls in the short run and falls more in the long run. c. rises in the short run and falls slightly in the long run. d. rises in the short run and rises more in the long run.
A negative shock in aggregate demand will likely result in no permanent change in ________
A) output B) the equilibrium inflation rate if the central bank responds by lowering interest rates C) aggregate demand, if the central bank responds by lowering interest rates D) all of the above E) none of the above