Using Figure 2 below, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A. wealth level decreases.
B. interest rates decrease.
C. expected profitability of investments decrease.
D. domestic income increases.
B. interest rates decrease.
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
The Law of Demand states that:
A) the demand for a commodity is mostly influenced by consumers' income. B) the quantity demanded of a commodity is the same for all consumers in a perfectly competitive market. C) the quantity demanded of a commodity varies inversely with the price of the commodity. D) the demand for a commodity always equals the supply of the commodity.
A production possibilities frontier will shift outward if there is an improvement in technology
a. True b. False
one of the four main categories of spending identified by John Maynard Keynes is consumption
a. true b. false