If consumption increases in general the aggregate demand curve will:
A. shift straight down.
B. shift to the right.
C. remain unchanged but the economy will move down along the curve to a higher quantity.
D. remain unchanged but the economy will move down along the curve to a lower quantity.
B. shift to the right.
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Define free markets. Does a perfectly competitive market qualify as a free market?
What will be an ideal response?
A Keynesian economist believes that
A) if the economy was left alone, it would rarely operate at full employment. B) the economy is self-regulating and always at full employment. C) the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. D) the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.
The flaw of the original Keynesian model of the business cycle is that it
A) assumes away output fluctuations. B) assumes complete wage rigidity. C) assumes unrealistic fooling of workers. D) requires procyclical wage movements and continuous labor market equilibrium.
The purpose of collateral and restrictive covenants is to reduce ________ in debt contracts
A) adverse selection B) transactions costs C) moral hazard D) loan amounts