"The aggregate demand multiplier results in the aggregate demand curve shifting by more than any given initial change in expenditure." Is the previous statement correct or incorrect?
What will be an ideal response?
The statement is correct. The implication is that a, say $10 billion increase in investment shifts the aggregate demand curve rightward by more than $10 billion.
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________ is defined as the increase in domestic assets held by foreigners minus the increase in foreign assets held domestically
A) Net transfers B) The current account C) The financial account D) Net exports
The study of the aggregate economic variables is
A) macroeconomics. B) microeconomics. C) positive economics. D) normative economics.
The long run for the industry is defined as a period of time long enough for
a. any new firm that desires to enter the industry. b. any old firm that desires to leave the industry. c. all aspects of production to vary and there are no fixed costs. d. All of the above are correct.
Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate demand shifts right, the central bank must
a. decrease the money supply, which will move output back towards its long-run level. b. decrease the money supply, which will move output farther from its long-run level. c. increase the money supply, which will move output back towards its long-run level. d. increase the money supply, which will move output farther from its long-run level.