Refer to the above figure. Suppose the current aggregate demand is represented by AD2. If aggregate demand falls to line AD3, then
A. the new equilibrium will be at j.
B. a new price level will be established at a.
C. the new equilibrium will be at k.
D. the new equilibrium real Gross Domestic Product (GDP) will be x.
Answer: D
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What are the factors that can shift the supply of financial capital to a certain investment?
a. if people do not want to alter their existing levels of risk b. if the riskiness or return on one investment is the same as other investments c. if the riskiness or return on one investment changes relative to other investments d. if people do not want to alter their existing levels of consumption
Both monetary policy and fiscal policy affect aggregate demand
a. True b. False Indicate whether the statement is true or false
Which is the most accurate statement?
A. Collective bargaining negotiations usually end as a strike. B. Most strikes cause devastating economic disruption. C. The firm with the least ability to withstand a strike would be a service firm.
If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada, which of the following would explain this pattern of trade?
A) The opportunity cost of producing fishing poles in Canada is higher than the opportunity cost of producing bacon in Mexico. B) Mexico has a higher opportunity cost of producing fishing poles than Canada, and Canada has a higher opportunity cost of producing bacon. C) Mexico must have an absolute advantage in producing fishing poles and Canada must have an absolute advantage in bacon. D) Mexico has a lower opportunity cost of producing bacon than Canada and Mexico has a comparative advantage in producing fishing poles.