Refer to the graph above. Which of the following changes will shift AD 1 to AD 2?
A cut in personal and business taxes
A shrinkage in the value of stocks and other financial assets
An increase in the value of the dollar relative to other currencies
An increase in real interest rates
Answer: A cut in personal and business taxes
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Optimal decisions are made on the basis of
A. rate of growth in total profit. B. average cost and average revenue figures. C. impact on market share. D. marginal cost and marginal revenue figures.
A price ceiling set below the market clearing price will tend to cause which of the following?
A. an increase in demand B. a shortage C. a surplus D. a reduction in supply
Suppose the country that pegs its currency has an overvalued real exchange rate and that output is currently above the natural level of output. Which of the following will occur as the economy adjusts to this situation?
A) P will decrease over time until Y = Yn. B) A reduction in the pegged value of the domestic currency will cause a leftward shift of the AD curve. C) Net exports will increase as the economy adjusts to this situation. D) Domestic goods will become less competitive as the economy adjusts by itself. E) none of the above
By making exchange ________, money allows for ________ and higher ________
A) harder; specialization; costs B) easier; specialization; productivity C) harder; generalization; productivity D) easier; specialization; costs