During Japan's economic slump in the early 1990s, monetary policy:
a. was highly effective at stimulating income.
b. was caught in a liquidity trap as a result of high inflation and interest rates.
c. was ineffective because of a liquidity trap caused by near zero interest rates.
d. was never even attempted.
e. was the cause of the slump.
C
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Labor productivity is $20 per hour and aggregate hours are 400 billion hours
a. What does real GDP equal? b. Because of technological advances, labor productivity doubles to $40 per hour. Furthermore, assume that aggregate hours decrease to 300 billion hours. What does real GDP equal?
Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because
A) they do not want to offend their employers who want them. B) they believe the restrictions will protect their jobs. C) politicians lobby to convince workers the restrictions will make them better off. D) they don't understand that the restrictions will threaten their jobs.