Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.
Figure 6.1Refer to Figure 6.1. The slope of budget constraint AC is
A. -5.0.
B. -2.0.
C. -0.5.
D. indeterminate from this information because prices are not given.
Answer: B
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
What are the key differences between how we illustrate an expansionary fiscal policy in the basic aggregate demand and aggregate supply model and in the dynamic aggregate demand and aggregate supply model?
What will be an ideal response?
If income increases by $10,000 . government purchases are fixed at $1,000 . investment spending is fixed at $2,000 . net exports are fixed at $500, and the marginal propensity to consume is 0.70, by how much does aggregate expenditure increase?
a. $700 b. $2,000 c. $7,000 d. $1,000 e. $1,400
The U.S. Secretary of the Treasury met with the Japanese Finance Minister to discuss possible cuts in the Japanese discount rate. The likely outcome of currency speculation in response to this news is that
A. the dollar will depreciate. B. the dollar will appreciate. C. the yen will appreciate. D. both the dollar and yen will appreciate.