Exhibit: The Inflation-Unemployment Cycle​(Exhibit: The Inflation-Unemployment Cycle) Because of lags in the application of expansionary policy to counter a recessionary gap, the economy may: 

Which of the following is true regarding investment?

Which of the following is an advantage of using money as a medium of exchange?

During a recession, rising transfer payments and falling tax collectionsI. help cushion households from the impact of the recession.II. buffers the fall in real GDP (relative to a situation where transfer payments do not rise and tax revenues do not fall).III. tend to increase a budget deficit or reduce a budget surplus.

A country has a comparative advantage if it can produce a good or service:

If the Fed sells government bonds, bank reserves will:

During an expansion, which of the following occur because of automatic stabilizers?I. Income tax revenues tend to rise.II. Government transfer payments tend to rise.III. The government’s budget deficit tends to fall or its budget surplus tends to rise.IV. They tend to amplify the rise in real GDP.

Which of the following describes the store of value function of money?

Which of the following describes the medium-of-exchange function of money?

When the Fed sells bonds in the open market, we can expect the: