A line that represents combinations of two goods that a consumer can purchase with a fixed income and given price for each good is called the:
a. indifference curve.
b. demand curve.
c. budget line.
d. money line.
c
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When the nominal interest rate is not constant, an increase in the growth rate of the money supply ________ the inflation rate, and ________ the debt-to-GDP ratio
A) increases; increases B) increases; decreases C) increases; has an ambiguous effect on D) decreases; increases
A increase in net exports
a. shifts the aggregate demand schedule upward b. shifts the aggregate demand schedule downward. c. does not shift the aggregate demand schedule. d. decreases saving.
The idea that the interaction of the multiplier and accelerator alone generates business cycles supports the view that the economy is
a. dependent on external shocks, such as housing booms, to stimulate investment which triggers the economy into a cycle b. always moving toward its equilibrium position, albeit not without going through a cyclical path c. always at full employment because the interaction is a chronic stimulant to the economy d. always stable, closely following the trend line of economic growth e. inherently unstable
A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.
Answer the following statement true (T) or false (F)