The real balances effect suggests that
A. when prices are higher, you buy fewer because the marginal utility of a good is diminishing.
B. when prices are higher, you buy more.
C. when prices are higher, your buying power is less, so you buy less.
D. when prices are higher, you buy less of what you originally wanted and use something else instead.
Answer: C
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Everything else held constant, an appreciation of the domestic currency will cause the IS curve to shift to the ________ and aggregate demand will ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
A unit tax of $1 will always
A) shift the supply curve upward by more than $1. B) shift the supply curve upward by less than $1. C) shift the supply curve up by exactly $1. D) leave the supply curve unchanged.
Historically, which of the following has had the highest average annual rate of return?
A) U.S. Treasury bonds B) corporate bonds C) money market mutual funds D) corporate stocks
The economic recovery program begun by the Roosevelt Administration to end the Great Depression was known as the _____________________.
Fill in the blank(s) with the appropriate word(s).