Blog

What did Arthur Laffer suggest President Reagan do in the 1980s?

The quantity theory of money and the equation of exchange provide good short-run explanations of the effects of the money supply on the larger economy.

Expansionary demand-side fiscal policies set up a tradeoff between increasing output at the expense of raising prices.

Prices do NOT help consumers decide:

After the banking crisis of 2008–2009, the financial services industry now has to meet:

Deflation is a decline in overall prices throughout the country.

Which statement is NOT true of economic model building?

Heather has one employee in her sweater shop who can sew six sweaters a day. When she hires a second person, the two employees can make ten sweaters together. The extra benefit received from hiring a second worker is _____ sweaters.

If the marginal propensity to save is 0.15, then $15 of every additional $100 of income will be spent on savings.

Which of these statements is (are) true? I. At full employment, expansionary fiscal policy results in an increase in aggregate demand, increasing output temporarily above full employment. II. When the government runs a deficit, it must sell bonds. III. When the federal government spends more than tax revenues permit, it can sell bonds only to foreigners.