To avoid the law of diminishing control, the government could:
A. change the regulations when it is appropriate to do so.
B. let the Federal Reserve decide the regulations and implement the regulations.
C. treat regulation as a one-time event that is not predictable.
D. leave the regulations the way they are.
Answer: A
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A lower real interest rate ________ investment spending and ________ consumption spending.
A. decreases; increases B. increases; increases C. decreases; decreases D. increases; decreases
Starting from long-run equilibrium, an adverse inflation shock results in a short-run equilibrium with ________ inflation and ________ output.
A. lower; lower B. higher; lower C. higher; higher D. higher; potential
The disruption to financial markets starting in August 2007 that caused both consumer and business spending to fall
A) shifted the aggregate demand curve to the right. B) shifted the aggregate demand curve to the left. C) shifted the aggregate supply curve to the right. D) shifted the aggregate supply curve to the left.
If your income increases from $40,000 to $48,000 and your consumption increases from $35,000 to $39,000 . your marginal propensity to consume (MPC) is:
a. 0.20. b. 0.40. c. 0.50. d. 0.80. e. 1.00.