In a binding situation, a decrease in the Z factors
A. does not shift the AD curve.
B. shifts the AD curve to the right.
C. shifts the AD curve to the left.
D. causes the AD curve to become horizontal.
Answer: A
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Which of the following four firms would most likely be part of a monopolistically competitive market?
A) Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, and Wrangler are all producers of jeans. B) Mark sells the tomatoes he grew in his backyard at the local farmers market. C) The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave. D) Amara Massage is the only firm which specializes in pre- and post-natal massage.
Refer to Table 10-2. Holding prices constant, when Keira's income changed from $18 to $23, her utility maximizing bundle changed. Based on your answers to her optimal choices at the two income levels, what type of goods are soup and sandwiches?
A) Soup is an inferior good and sandwiches are a normal good. B) Both soup and sandwiches are normal goods. C) Both soup and sandwiches are inferior goods. D) Soup is a normal good and sandwiches are an inferior good.
Assume the economy is initially in equilibrium where potential GDP is less than real GDP
If the expected inflation rate, the term structure effect, and the default-risk premium are constant, ________ in the Fed's target short-term nominal interest rate will shift up the MP curve which will result in real GDP ________. A) an increase; falling B) an increase; rising C) a decrease; falling D) a decrease; rising
Whenever the absolute value of the price elasticity of demand is greater than 1, but less than infinite
A) demand is inelastic. B) demand is unit elastic. C) demand is elastic. D) demand is perfectly elastic.