An increase in government spending without any increase in taxes
A. does not increase aggregate demand.
B. causes investment spending to increase.
C. requires additional government borrowing.
D. would effectively eliminate an inflationary gap.
Answer: C
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A good is nonexcludable if:
A. there is no way to prevent a person from consuming or using it. B. more than one person can consume it at the same time without affecting its value to others. C. consumption of it involves perfect rivalry. D. consumption is completely excludable.
If people choose to hold some of a newly received loan as cash instead of keeping it in a checking account, _____
a. the money supply will not increase as much as it would had borrowers deposited all of the money b. the money supply will remain unchanged c. the money supply will decrease as much as it would had borrowers deposited all the money d. the banking system will collapse e. the economy will experience a recession
Legally, a patent grants a firm an exclusive right to its innovation for a period of
a. 1 year b. 5 years c. 10 years d. 14 years e. 17 years
According to the interest-rate effect, aggregate demand slopes downward (negatively) because
A. lower prices increase money holdings, decrease lending, interest rates rise, and investment spending falls. B. lower prices increase the value of money holdings and consumer spending increases. C. lower prices decrease the value of money holdings and consumer spending decreases. D. lower prices reduce money holdings, increase lending, interest rates fall, and investment spending increases.