An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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Assume the MPC is 0.8 . Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the
a. left by $180 billion. b. left by $500 billion. c. right by $180 billion. d. right by $400 billion.
In the Keynesian-cross model, if the MPC equals 0.75, then a $1 billion decrease in taxes increases planned expenditures by ______ and increases the equilibrium level of income by ______.
Fill in the blank(s) with the appropriate word(s).
Which of the following is NOT a characteristic or focus of microeconomics?
A) individual consumers. B) analysis of aggregate economic variables C) firm behavior D) individual markets
What are the private costs of driving an automobile? What are the external costs?
What will be an ideal response?