Government policy to reduce unemployment and increase national output can be illustrated by an
A. outward shift of the aggregate demand curve caused by an increase in government spending.
B. outward shift of the aggregate supply curve caused by a reduction in government spending.
C. inward shift of the aggregate demand curve caused by an increase in government spending.
D. inward shift of the aggregate supply curve caused by a reduction in government spending.
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Use consumer indifference curves and budget lines to illustrate the effects of an increase in income for a normal good and an inferior good (use two graphs). Be sure your diagrams are fully and correctly labeled.
What will be an ideal response?
Profits and losses are true signals because they
A) convey information about true long-run profits. B) cannot be misinterpreted by entrepreneurs. C) convey information about where to place resources and reward people who act on the information. D) reward people who make profits with even more profits and punish those who make losses with even more losses.
Interest and principal on long-term debt are considered
a. long-term liabilities b. fixed liabilities c. liquid liabilities d. general liabilities e. current liabilities