Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2.
B. P1 and Y2.
C. P4 and Y2.
D. P1 and Y1.
Answer: B
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Median household income is $50,000 per year. The typical household spends about $125 per year on milk, which has an income elasticity of about 0.07. From this information, we can conclude that
A) milk is a luxury. B) milk is a Giffen good. C) the income effect from a change in the price of milk is very large. D) the income effect from a change in the price of milk is very small.
In foreign exchange markets, a U.S. resident who imports New Zealand apples is:
a. a demander and supplier of New Zealand dollars. b. a demander and supplier of U.S. dollars. c. a demander of New Zealand dollars and a supplier of U.S. dollars. d. a supplier of both New Zealand dollars and U.S. dollars. e. a supplier of New Zealand dollars and a demander of U.S. dollars.
When a tax is placed on a good
a. the price paid by buyers rises, and the price received by sellers rises. b. the price paid by buyers rises, and the price received by sellers falls. c. the price paid by buyers falls, and the price received by sellers rises. d. the price paid by buyers falls, and the price received by sellers falls.
Data show that in the U.S. since 1915, the velocity of M1 money
a. has been highly stable at approximately 24 b. has increased at about 3 percent per year c. has been erratic, varying between about 2 and 6 d. increased steadily until the 1960s, then decreased sharply thereafter e. has stayed fairly constant at approximately 4