Use the following graph to answer the next question.
Suppose an economy's full employment output is at the level Qf shown on the graph. Further, suppose the economy's current aggregate demand is represented by AD1. If the government swiftly implements a stimulus program that immediately shifts the economy's aggregate demand to AD2, the aggregate demand in the short-to-medium term would be most closely represented by
A. AD0.
B. AD1.
C. AD2.
D. AD3.
Answer: D
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You are studying with a friend, and your friend says "To maximize utility, a consumer must consume the combination of goods so that the marginal utility of good X equals the marginal utility of good Y
" Explain whether your friend's statement is correct or incorrect.
An increase in the real interest rate, all other things held constant, will cause a country's ________ to ________
A) current consumption: increase B) current consumption: decrease C) terms of trade; improve D) terms of trade; worsen E) welfare level; improve
The marginal propensity to consume (MPC) is computed as the change in consumption divided by the change in:
a. GDP. b. disposable personal income. c. saving. d. none of these.
On the Micronesian island of Yap, the money that is primarily used as currency is
a. paper money. b. wheels made of stone. c. gold. d. shells and gems.