The budget line and the indifference curve are geometric devices used to provide a closer look at consumer choice.
Answer the following statement true (T) or false (F)
True
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All of the following are examples of demand shocks, except one. Which is the exception?
a. A spontaneous decrease in money demand b. A tax increase c. A contraction of the money supply by the Fed d. An increase in the price level e. A reduction in government spending
President Obama would generally advocate increased spending when the economy needs stimulus and increased taxation when the economy needs to be restricted
a. True b. False Indicate whether the statement is true or false
When Milton Friedman said that "inflation is always and everywhere a monetary phenomenon," he was referring to
A) one-shot inflation. B) continued inflation. C) a and b D) neither a nor b
The real-balance effect pertains to the effect of:
A. Consumer spending on the price level, while the wealth effect refers to the impact of changes in wealth on consumer spending B. Wealth-changes on aggregate demand, while the wealth effect refers to the impact of changes in the price level on the real value of wealth C. Changes in interest rate on aggregate demand, while the wealth effect refers to the impact of changes aggregate demand on people's wealth D. Price-changes on aggregate demand, while the wealth effect refers to the impact of changes in wealth on aggregate demand