Refer to Figure 16-6. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is pursued, then at point B
A) the unemployment rate is very low.
B) there is pressure on wages and prices to fall.
C) income and profits are falling.
D) firms are operating at below capacity.
E) the economy is below full employment.
A
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Loss aversion refers to the idea that:
A) people generally tend to avoid risky activities. B) people are more prone to making losses than gains in day-to-day transactions. C) people psychologically weight a loss more heavily than they psychologically weight a gain. D) people are unwilling to undertake expenditures that reduce the probability of future losses.
Barter requires
a. that the exchanged goods be portable b. that the exchanged goods be durable c. a double coincidence of wants d. that the exchange medium be divisible e. an effective middleman
The amount by which consumption increases when after-tax income increases by $1 is called the:
A. marginal propensity to consume. B. consumption multiplier effect. C. marginal consumption revenue. D. variable propensity to consume.
If a country's trade deficit declines, but it does not go into surplus, then:
A. it must be producing more than it is consuming. B. it must be buying more assets from foreigners. C. it must be selling fewer assets to foreigners. D. its consumption must be rising relative to its production.