Answer the following statements true (T) or false (F)
1. The innovation theory is classified among the real or physical causes of the business cycle.
2. The theory of rational expectations is classified as a psychological cause of the business cycle.
3. The under consumption theory is classified as a real or physical cause of the business cycle.
4. The under investment theory is classified as a monetary cause of the business cycle.
5. In using the GDP as a measure of business cycles, it is best to use real GDP.
1. TRUE
2. TRUE
3. FALSE
4. FALSE
5. TRUE
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Goods produced by people in one country that are sold in other countries are called
a. tariffs b. surplus c. exports d. services e. imports
Which of the following fiscal policy changes would be the most contractionary?
A. A $40 billion increase in taxes B. A $10 billion increase in taxes and a $30 billion cut in government spending C. A $20 billion increase in taxes and a $20 billion cut in government spending D. A $30 billion increase in taxes and a $10 billion cut in government spending