Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A. B to A.
B. A to C.
C. C to D.
D. B to D.
Answer: B
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Suppose that IS and LM intersect at full-employment output. A rightward shift of LM will be followed by a __________ price level that shifts LM to the __________ in a return to full employment
A) rising; right B) rising; left C) falling; right D) falling; left
The optimal level of pollution is:
a. the level at which the marginal social cost of air quality equals the marginal social benefit. b. the level at which the average social cost of air quality equals the average social benefit. c. the level at which the total social cost of air quality equals the total social benefit. d. zero.
A change in the money supply will change investment when
A) the money supply is a function of the price level. B) investment is interest-sensitive. C) investment depends only on the level of GDP. D) investment is interest-insensitive. E) the supply for money is a function of the interest rate.
The sale of Treasury securities by the Federal Reserve will, in general
A) not change the money supply. B) not change the quantity of reserves held by banks. C) increase the quantity of reserves held by banks. D) decrease the quantity of reserves held by banks.