question 19 Which of the following is FALSE concerning the l

question 19

Which of the following is FALSE concerning the long run?

Select one:

a. The current account must tend toward balance in the long run.

b. Economists believe that fiscal and monetary policies have no permanent effects on the economy.

c. Economists more or less agree that the economy tends to fluctuate around the level that is consistent with full employment.

d. None.

e. In the long run, the unemployment rate returns to its normal level.

Question 20

Which of the following is NOT a characteristic of a financial crisis caused by macroeconomic imbalances?

Select one:

a. Crises can by expansionary fiscal policies accompanied by high budget deficits.

b. Crises can be predictable.

c. Crises can be unpredictable.

d. Crises can be caused by budget surpluses.

Solution

Question No. 19)

Economists do not believe that fiscal and monetary policies have permanent effects. Early Keynesians do not believe that monetary policy has long lasting impact on economy. Monetary policy is not effective enough to produce desirable impacts.

Hence, right answer is (B)

20)

Budget surplus does not cause financial crisis, it may retard growth rate.

Hence, right asnwer is (D)