Let's look at a simple example—a new building construction program. Government money is spent on goods such as concrete and steel as well as paying workers.
What will be an ideal response?
This directly creates new aggregate demand. In addition, there are multiplier effects—construction workers will use their incomes to buy all kinds of consumer goods and services. The multiplier effects add to the original economic stimulus resulting from the government spending.
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Demand is perfectly inelastic when
A) shifts in the supply curve results in no change in price. B) the good in question has perfect substitutes. C) shifts of the supply curve result in no change in quantity demanded. D) shifts of the supply curve result in no change in the total revenue from the quantity sold.
If the government restricts the selling of corn so that the quantity is less than the equilibrium quantity, then the policy I. creates a deadweight loss. II. decreases total surplus
A) Only I is correct. B) Only II is correct. C) Both I and II are correct. D) Neither I nor II is correct.
In mid-2012 Delta increased the price of a New York to LA ticket by 10 percent. As a result of this price hike, there was a ________ shift in the demand curve for a ticket on Continental because the price of a ________ had risen
A) rightward; complement B) leftward; substitute C) leftward; complement D) rightward; substitute
Large countries tend to be more open than small countries
Indicate whether the statement is true or false