A tax cut shifts the aggregate demand curve the farthest if
a. the MPC is large and if the tax cut is permanent.
b. the MPC is large and if the tax cut is temporary.
c. the MPC is small and if the tax cut is permanent.
d. the MPC is small and if the tax cut is temporary.
a
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Using the information in Situation 20-1, if aggregate output is equal to $10,000, then unplanned inventory investment equals
A) -$1000 B) -$100 C) $0 D) $100
In the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ________, the equilibrium level of aggregate output to fall, and
the IS curve to shift to the ________, everything else held constant. A) up; left B) up; right C) down; left D) down; right
The Populists succeeded in using the federal government to limit subsidies granted to corporations
Indicate whether the statement is true or false
A firm’s minimum AC is $10, its minimum AVC $7. Show this firm’s short-run supply curve, explaining how you obtained it.
What will be an ideal response?