Question
1: Suppose an asset that was worth $100 dollars in 1985 is worth $400 in 2020, meaning its value doubled twice in 35 years. What
1: Suppose an asset that was worth $100 dollars in 1985 is worth $400 in 2020, meaning its value doubled twice in 35 years. What was the annual growth in value for this asset?
A. 5%
B. 4%
C. 3%
D. 2%
2: Suppose the government decides to lower taxes as a form of fiscal policy. Assuming there is zero crowd out, the lower taxes will result in a _____ in inflation and a _____ in real growth in the short run.
A. decrease, decrease
B. decrease, increase
C. increase, decrease
D. increase, increase
3: Suppose the economy is in long-run equilibrium when suddenly, consumer confidence increases. In the long run, what happens to inflation and real growth?
A. inflation increases, real growth increases
B. neither inflation nor real growth change
C. inflation increases, real growth doesn't change
D. inflation falls, real growth falls
4: Suppose the tariff on car imports drops from 5% to 3% per car. As a result, we can expect the number of cars produced domestically to _____ and the number of cars purchased domestically to _____.
A. decrease, increase
B. increase, increase
C. decrease, increase
D. decrease, decrease
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