Refer to the graph below. Which of the following factors does not explain a movement along the AD curve?
A. The expenditure multiplier effect
B. The real-balances effect
C. The interest-rate effect
D. The foreign purchases effect
A. The expenditure multiplier effect
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Maximum employment and moderate long-term interest rates are best achieved with
A) price stability. B) high and variable inflation rates. C) high real interest rates. D) high and stable inflation rates. E) high short-term interest rates.
According to the rational expectations hypothesis, monetary policy can have real effects on such variables as real Gross Domestic Product (GDP) in the short run
A) only when the policy is anticipated. B) only when the policy is unsystematic and unanticipated. C) regardless of whether the policy is anticipated or unanticipated. D) when the Federal Reserve's open market committee operates as expected in either buying or selling bonds.
For a firm in a perfectly competitive market, a price decrease:
A. increases the profit-maximizing quantity. B. lowers the profit-maximizing quantity. C. is unrelated to the profit-maximizing quantity. D. signifies the firm should leave the market.
Social Security is:
A. not purely a pension program, because some people receive more than they paid in. B. a means-tested public assistance program designed to assist the poor. C. a means-tested public assistance program designed to reduce income inequality. D. a pension program that returns benefits to participants equal to the amount paid in.