Assume we are in a recession and the Federal Reserve keeps nominal interest rates at zero. Further, assume that imports grow when consumption grows. Expansionary fiscal policy in the United States will probably lead to [check all that apply]
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Variable inflation has higher costs than stable inflation wi…
Variable inflation has higher costs than stable inflation with the same average.
Free junior college tuition fees in the United States is a c…
Free junior college tuition fees in the United States is a cost-effective way to increase college enrollment. (Background: Tuition and fees are already low for public junior colleges in the U.S., but there is still positive.)
Free trade hurts American workers, but helps workers in low-…
Free trade hurts American workers, but helps workers in low-wage nations.
In a nation with flexible exchange rates, assume there is a…
In a nation with flexible exchange rates, assume there is a fiscal expansion (G̅ up and/or T̅ down) and offsetting monetary policy (that is, monetary contraction). We expect stable output, lower inflation, lower real interest rates, higher investment, and a stronger currency.
Frictional (or search) unemployment represents people ration…
Frictional (or search) unemployment represents people rationally choosing to search for a job. Thus, no government policy is called for to address it.
A balanced budget rule (so long as it corrected for cyclical…
A balanced budget rule (so long as it corrected for cyclical factors) would be a good thing.
The long-term fiscal problems of most industrialized nations…
The long-term fiscal problems of most industrialized nations are primarily due to: [Select all that apply]
Assume adaptive expectations. To end an inflation, a central…
Assume adaptive expectations. To end an inflation, a central bank should [Check all that apply]
If the European Central bank cuts long-term interest rates i…
If the European Central bank cuts long-term interest rates in the Eurozone, then the United States will be better off.