If a household's income doubles, its budget constraint will
A. be unaffected.
B. shift out parallel to the old one.
C. pivot at the Y-intercept.
D. shift in parallel to the old one.
Answer: B
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During 2013, a country reported that its real GDP increased by $3.0 billion. If the slope of its aggregate planned expenditure curve is 0.9, then which of the following might have led to the increase in real GDP?
A) Investment decreased by $0.3 billion. B) Imports increased by $0.3 billion. C) Government expenditure on goods and services increased by $3 billion. D) Exports increased by $0.3 billion. E) Exports decreased by $0.3 billion.
In the short run, when the prevailing market price falls below the average variable cost curve, a firm in perfect competition will shut down because: a. economic profit is zero
b. price is less than marginal revenue. c. marginal revenue is insufficient to pay average variable cost. d. other firms will enter the market seeking profits.
If the actual inflation rate exceeds the expected inflation rate, then: a. the economy is operating along the long-run Phillips curve
b. unemployment exceeds the natural rate. c. maintaining the existing unemployment rate will require increasing inflation in the long run. d. the actual rate will tend to fall toward the expected rate. e. unemployment will tend to decrease in the long run.
At which of the following exchange rates would the quantity of British pounds demanded be the highest?
a. $5.00 per pound. b. $2.50 per pound c. $3.00 per pound. d. $1.50 per pound. e. $2.00 per pound.