In the classical model, how do shifts in aggregate demand affect real GDP?
A) Real GDP will remain unchanged.
B) Increases in aggregate demand increase real GDP.
C) Increases in aggregate demand decrease real GDP.
D) Decreases in aggregate demand increase real GDP.
A
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The equation of exchange is a(n)
a. identity relating the volume of transactions at current prices to the stock of money times the turnover rate of each dollar. b. "truism" and by itself does not explain the variables it contains. c. identity relating the volume of transactions at base year prices to the stock of money times the turnover rate of each dollar. d. Both a and b e. Both b and c
Why might a VAT be more popular politically than a retail sales tax?
a. Its transparency appeals to voters. b. Its lack of transparency makes it easier to misunderstand its effects. c. It is more efficient per dollar raised. d. It is more consistent with the benefit principle of taxation.
Did the large U.S. budget deficits in the 1980s “crowd out” investment as some economists had predicted?
A. Yes, investment dropped as predicted. B. Yes, although investment did not fall nearly as much as some had feared. C. No, investment was not crowded out, but net exports dropped. D. No, no crowding out at all occurred.
Producer surplus is the difference between the most a person is willing to pay and market price.
Answer the following statement true (T) or false (F)