During an economic contraction, housing and stock prices generally
a. fall, leading to a reduction in aggregate demand.
b. fall, leading to an increase in aggregate demand.
c. rise, leading to a reduction in aggregate demand.
d. rise, leading to an increase in aggregate demand.
A
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The permanent income hypothesis implies that the effect of a temporary tax cut on economic activity
A) is greater than the effect of a permanent tax cut. B) is the same as the effect of a permanent tax cut. C) is smaller than the effect of a permanent tax cut. D) can be greater than or smaller than the effect of a permanent tax cut, depending on how the tax cut affects the government.
Unemployment compensation is an example of
A) a subsidized service. B) a regressive income program. C) a Social Security benefit. D) an income maintenance program.
Two of the most important macroeconomic issues are unemployment and inflation.
Answer the following statement true (T) or false (F)
When quantity demanded decreases in response to a change in price:
a. the demand curve shifts to the right b. the demand curve shifts to the left. c. there is a movement down along the demand curve. d. there is a movement up along the demand curve.