Explain the changes that would cause the dynamic aggregate demand curve to shift.
What will be an ideal response?
The dynamic aggregate demand curve would shift as a result of (1) changes in aggregate expenditures. Changes in any of the components of aggregate expenditures that are not caused by movements in the real interest rate shift the dynamic aggregate demand curve. The curve would also shift due to (2) shifts in the monetary policy reaction curve that could be due to changes in the inflation target or changes in the long-run real interest rate.
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Real business cycle theory explains variations in prices, employment, and real Gross Domestic Product (GDP) by focusing on
A) changes in real variables such as supply shocks, technological changes, and shifts in the composition of the labor force. B) anticipated changes in fiscal policy enacted by the government. C) the effects of the Phillips curve. D) anticipated monetary policies enacted by the Fed.
A tax of 10 percent of the ticket price of an airplane ticket is _____
a. a unit tax b. an ad valorem tax c. an income tax d. a value-added tax
Households in the Lowest Income 20%:
a. usually have the least one full-time, year round worker b. usually remain in this Group for decades c. both of the above d. neither of the above
Which of the following is not an example of microfinance?
A. A loan to a small restaurant owner to buy a refrigerator. B. A loan to a woman to buy a sewing machine to make clothes to sell. C. A loan to a farmer for a goat that will give milk that the farmer can sell. D. A loan to a U.S.-owned electronics company to expand overseas.