Assume the price level is flexible both upward and downward but the Fed desires to keep the price level stable. If the level of aggregate supply decreases, the Fed must
A. Increase the money supply.
B. Reduce the reserve requirement.
C. Decrease the money supply.
D. Reduce interest rates.
Answer: C
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The law of demand holds that as prices of goods decrease, people are willing to buy more.
Answer the following statement true (T) or false (F)
The theory of public choice suggests that
A) government agencies tend to be inefficient because the people running them do not understand the concept of opportunity cost. B) government agencies tend to be inefficient because they are subject to institutional arrangements in which managers do not have an incentive to be efficient. C) the goods provided by government, whether public or private goods, are not scarce. D) you can lower your tax bill if you are careful not to consume too many government resources, regardless of what your neighbors do.
An increase in intended investment leads to a higher equilibrium level of national income
Indicate whether the statement is true or false
The national poverty rate in the United States reached a low in the
a. early 1960s. b. early 1970s. c. late 1970s. d. early 1980s.