The problem typically during a recession is not that there is too little money, but too little spending. If the problem was too little money, what would be its cause? If the problem was too little spending, what could be its cause?
What will be an ideal response?
Too little money would be caused by too small of a money supply by the Federal Reserve. Too little spending could be caused by a variety of reasons such as a decrease in consumption spending by households because they become pessimistic about the future, a decrease in investment spending by firms because they lower their estimates of the future profitability of new factories and machinery, or a decrease in U.S. exports because a major trading partner is in a recession.
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A speculative attack on an overvalued currency leads to a(n) ________ in international reserves and a(n) ________ in the fundamental value of the currency.
A. decrease; decrease B. increase; decrease C. increase; increase D. decrease; increase
The marginal product of a country's workers falls during winters due to excessive cold. Which of the following is likely to happen in this case, assuming all else equal?
A) The country's labor demand curve will shift to the right in winter. B) There will be an upward movement along the labor demand curve. C) The country's labor demand curve will shift to the left in winter. D) There will be a downward movement along the labor demand curve.
When personal computers were first produced, the price was very high. As time passed, the price of personal computers fell because
A) the initial price was too high and nobody bought personal computers. B) people's incomes increased and personal computers are an inferior good. C) the demand for personal computers decreased. D) there were technological advances in the production of personal computers. E) None of the above answers is correct.
Among all the combinations of goods attainable by a consumer facing a budget constraint, the one that maximizes total utility is the one that
a. maximizes marginal utility per dollar spent on each good b. maximizes marginal utility per pound, or other physical quantity, of each good c. equates the marginal utilities per dollar spent on each good d. equates the marginal utilities per pound, or other physical quantity, of each good e. drives the marginal utility of each good to zero