In Figure 10.1, which of the following could cause a shift from AD0 to AD1, ceteris paribus?
A. A decrease in government spending on the education.
B. An increase in consumer confidence.
C. An increase in exports.
D. A decrease in interest rates.
Answer: A
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Which of the following is an example of built-in stability? As real GDP decreases,
A. income tax revenues increase and transfer payments decrease. B. income tax revenues and transfer payments both decrease. C. income tax revenues and transfer payments both increase. D. income tax revenues decrease and transfer payments increase.
The "gold-standard" is a system in which:
A) gold mining firms own the right to print currency. B) people use gold as a medium of exchange. C) paper currency is backed by gold. D) gold is imported into the U.S. in exchange of paper currency.
Phil Harrison is a welder who works on skyscrapers and extension bridges. Phil's brother William is also a welder but he works in a manufacturing plant where he does all of his welding on ground level
Which of the following would not explain why Phil earns a higher wage than his brother? A) cognitive dissonance B) Phil's marginal revenue product is greater than William's marginal revenue product. C) Phil has greater experience as a welder than his brother has. D) Phil's job is more hazardous than William's job.
Assume that we want to drive our economy out of recession by generating a $400 billion change in real GDP. The MPC is 0.80 . Which of the following policy prescriptions would generate the targeted $400 billion change in income?
a. $120 billion increase in government spending and $50 billion increase in tax revenue. b. $140 billion increase in government spending and $70 billion increase in tax revenue. c. $160 billion increase in government spending and $120 billion increase in tax revenue. d. $220 billion increase in government spending and $100 billion increase in tax revenue. e. $400 billion increase in government spending and $300 billion increase in tax revenue.