Businesses may reduce their investment spending following expansionary fiscal policy because:
A. as the economy's growth rate increases, profits rise without the need for new investments.
B. profits fall as expansionary fiscal policy slows the economy.
C. increased government spending will drive up interest rates.
D. the government will take advantage of all the good investment opportunities.
Ans: C. increased government spending will drive up interest rates.
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What will be an ideal response?
The trade-off between coordinating or not coordinating policies for central banks is measured in terms of
A) inflation and the lowered effectiveness of policies. B) wage inflation and increased effectiveness of policies. C) speculative pressure and intra-marginal adjustments. D) fixed and floating exchange rates.
In monopolistic competition as well as in monopoly,
a. price exceeds marginal revenue for each firm. b. profit is zero in a long-run equilibrium for each firm. c. entry and exit by firms are unrestricted. d. there are at most a few firms in each market.
Graphically, a decrease in advertising will cause the demand curve to:
A. shift rightward. B. become steeper. C. become flatter. D. shift leftward.