Answer the following statement(s) true (T) or false (F)
1. The expenditure multiplier can be negative.
2. As the price level decreases, the level of aggregate expenditure remains constant.
3. As aggregate expenditure increases, the aggregate demand curve shifts right.
4. The aggregate expenditure model can explain cost-push inflation.
5. The aggregate expenditure model allows for the economy to self-correct.
1. True
2. False
3. True
4. False
5. False
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Exogenous changes in spending refer to changes in planned spending:
A. caused by changes in output. B. caused by changes in the inflation rate. C. not caused by changes in output or changes in the inflation rate. D. caused by changes in the real interest rate.
Which of the following is TRUE about public goods?
A) Consumption is rival and nonexcludable. B) Consumption is nonrival and excludable. C) Efficient provision occurs at the level of output at which total benefit is equal to total cost. D) Unregulated private markets produce less than the efficient quantity of a public good.
Monopolistic competition has at least one similarity to perfect competition: firms are free to enter and leave the industry.
Answer the following statement true (T) or false (F)
Aggregate supply can be thought of as
A. a fixed amount of output. B. unrelated to the price level. C. a schedule of output at different price levels. D. the volume of goods at the ends of the production possibilities curve.