Figure 36-7
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In Figure 36-7, there are three aggregate expenditure functions (C + I + G + X? IM) for an open economy. Which of the following would cause a movement from C to B?
A. A European economic expansion
B. An appreciation of the dollar
C. A depreciation of the dollar
D. An increase in the money supply
Answer: B
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Advocates of active stabilization policies, in defense of their views, argue that
A. stabilization is less necessary than is commonly advocated by monetarists. B. discretionary policy in not necessary because automatic stabilizers are sufficient. C. perfect stabilization is not possible, but moderate improvements in economic performance are possible, such as the response to the events of September 11, 2001. D. All of these responses are correct.
Which of the following uses of tax revenues collected by the government leads to increased capital deepening?
A) Medicare payments B) Social Security payments C) increased foreign aid D) building roads
Prospect theory implies that consumers are motivated by
a. The actual price level b. The distance of the price from the reference price c. All of the above d. None of the above
Suppose that Firm A deviates from a trigger strategy to support a high price. What is A's payoff from cheating?
a. 0 b. 50 c. -10 d. 25