Refer to the information provided in Figure 29.2 below to answer the question(s) that follow.
Figure 29.2Refer to Figure 29.2. If the economy is currently at Point B and policy makers implement a policy which shifts the aggregate demand curve to AD1, the time the economy needs to make the adjustment is known as the
A. implementation lag.
B. recognition lag.
C. frictional lag.
D. response lag.
Answer: D
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Flexible exchange rates ________ of monetary policy to stabilize the economy and fixed exchange rates ________ of monetary policy to stabilize the economy.
A. offset the impact; reinforce the impact B. strengthen the ability; prevent the use C. prevent the use; strengthen the ability D. strengthen the impact; strengthen the impact
In the long run, which of the following is considered a variable cost?
A) Expenditures for wages B) Expenditures for research and development C) Expenditures for raw materials D) Expenditures for capital machinery and equipment E) all of the above
If the price of a cup of coffee increases by 50 percent, the quantity demanded decreases by 50 percent. The price elasticity of demand is:
A. elastic. B. inelastic. C. unit elastic. D. zero.
Which one of the following is TRUE in an open economy with a government sector?
A. The equilibrium level of real GDP occurs when total planned real expenditures equal real GDP. B. The equilibrium level of real GDP occurs when planned real investment spending is zero. C. The equilibrium level of real GDP occurs when real net export spending equals zero. D. The equilibrium level of real GDP occurs when planned real saving equals government spending.