Movement along the aggregate demand curve may be caused by a change in autonomous investment spending.
a. true
b. false
b. false
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A basic assumption used in many economic model is
A) as price goes up, the amount purchased will go up too. B) as price goes up, less will be offered for sale on the market. C) if the underlying theory doesn't represent reality, it is not useful. D) ceteris paribus, which means all other things remain unchanged.
A common definition of a recession is a period of time
A) of at least 6 months during which real GDP decreases. B) with an increase in real economic output from the previous period. C) with no change in real GDP. D) with no change in the dollar (money) value of economic output.
The new classical model implies that a
a. budget surplus will effectively retard inflation emanating from excess demand. b. budget deficit will increase the real interest rate. c. substitution of debt for tax financing will leave aggregate demand and real output unchanged. d. planned budget deficit will be a highly effective tool to combat a recession.
If the marginal propensity to save (MPS) = 0.25, then
A. the MPC = 0.75. B. the APC = 0.25. C. the APS = 0.25. D. consumption equals $750 when income equals $1,000.