Which of the following will be observed if the U.S. federal government reduces fiscal spending, keeping other things constant?
a. The aggregate demand curve will shift to the right.
b. The aggregate expenditure in the economy will decrease.
c. The economy will approach potential GDP.
d. The marginal propensity to consume will increase.
e. The average price level will increase.
b
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When economists describe the theory of consumer choice, they
a. portray people as simple and methodical with perfectly predictable patterns of behavior. b. assert that consumer's decisions are based on which goods and services give them the greatest utility within their limited incomes. c. point out that consumers rarely consider utility in their purchase decisions; they look at other factors like convenience, peer behavior, and price. d. assert that the retail price is the only variable consumers really consider in making their purchasing decisions. e. admit that consumer behavior is random and there is no credible economic theory to explain the phenomenon.
Suppose a country has government expenditures of $3,500, taxes of $2,200, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, capital depreciation of $800, and investment of $3,000 . GDP equals
a. $24,450. b. $11,550. c. $15,300. d. $20,700.
The budget line shows:
A. the amount of product A that a consumer is willing to give up to obtain one more unit of product B. B. all possible combinations of two goods that can be purchased, given money income and the prices of the goods. C. all equilibrium points on an indifference map. D. all possible combinations of two goods that yield the same level of utility to the consumer.
The seasonally adjusted unemployment rate
A. reports only seasonal unemployment. B. is impossible to compute since no one knows what the seasonal component equals. C. is another name for structural unemployment. D. removes the seasonal variation from the unemployment rate.