Figure 14.1 shows three aggregate demand curves. A shift from curve AD2 to curve AD1 could be caused by a(n):
A. increase in the money supply.
B. increase in taxes.
C. increase in the price level.
D. increase in government spending.
Answer: B
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Workers at a local mining company are paid $25.60 per hour, and they have incorporated a 3 percent annual raise in their contracts to account for expected inflation
Explain how unexpected inflation of 5 percent will affect the real wage and the unemployment rate.
Financial markets promote economic efficiency by
A) channeling funds from investors to savers. B) creating inflation. C) channeling funds from savers to investors. D) reducing investment.
Exhibit 12-2 Lorenz curve
As shown in Exhibit 12-2, the perfect equality line is drawn between points:
A. A and B. B. B and D. C. A and C along the straight line. D. A and C along the curve.
Political instability is an impediment to development mainly because it:
A. undermines both domestic and foreign investment in a developing country. B. creates cultural and social differences among groups in developing countries. C. produces excessive levels of domestic saving. D. redistributes income.