A $100 million decrease in government expenditure on goods and services leads to an even larger decrease in aggregate demand because of
A) induced changes in consumption expenditures.
B) automatic fiscal policy.
C) induced changes in aggregate supply.
D) discretionary fiscal policy.
E) the reinforcing effect of monetary policy.
A
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Keynes believed
A. increases in investment expenditures are due to lower interest rates. B. increases in investment expenditures are due to high profit expectations. C. increases in investment expenditures are due to excessive funds in the loanable funds market. D. since supply creates its own demand, increases in investment expenditures creates additional supply and therefore more demand and earnings for the businesses.
Which of the following Fed policies would help the economy out of a recession?
A. An increase in reserve requirements B. Open market sales of government securities C. Open market purchases of government securities D. An increase in the discount rate
?Suppose a perfectly competitive firm and industry is in long-run equilibrium and the firm earns an economic profit in the short run. Which of the following is likely to occur in the long run?
a. ?The market supply curve will shift to the right, and the market price will decrease. b. ?The market supply curve will shift to the left, and the market price will increase. c. ?The firm will continue to earn economic profit. d. ?There will be an increase in the amount of economic profit earned by the firm. e. ?Industry output will decrease.
Refer to the information provided in Figure 4.6 below to answer the question(s) that follow.Equilibrium in this market occurs at the intersection of curves S and D.
Figure 4.6Refer to Figure 4.6. At equilibrium, consumer surplus is area
A. G. B. A. C. A + B + C. D. E + F + G.