The economy is in a recessionary gap, wages are inflexible downward, and there is complete crowding out. Which of the following is consistent with this state of affairs?
A) The economy will soon self-regulate and produce Natural Real GDP.
B) Expansionary fiscal policy will be effective at removing the economy from the recessionary gap.
C) If expansionary fiscal policy is implemented, the AD curve will shift to the right, and eventually the price level and Real GDP will rise.
D) b and c
E) none of the above
E
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Everything else constant, a stronger dollar will mean that
A) vacationing in England becomes more expensive. B) vacationing in England becomes less expensive. C) French cheese becomes more expensive. D) Japanese cars become more expensive.
Everything else held constant, a decrease in net taxes ________ aggregate ________
A) increases; demand B) decreases; demand C) decreases; supply D) increases; supply
Why isn't the actual level of an index, for example the Dow Jones Industrial Average, very useful on its own?
What will be an ideal response?
Recall the Application about the price competition between satellite and cable TV services to answer the following question(s).Recall the Application. In most cases where satellite TV service is introduced in an area with cable TV service, if the price of cable TV increases, then consumer surplus (in the cable TV market) usually:
A. increases. B. decreases. C. drops to zero. D. becomes negative.