An appropriate fiscal policy response when aggregate demand is growing at a faster rate than aggregate supply is to decrease the money supply
Indicate whether the statement is true or false
FALSE
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In the figure above, if point "a" represents the original equilibrium and point "b" the new equilibrium, then
A) there has been an increase in supply. B) there has been an increase in demand. C) there has been a change in the quantity supplied and no change in supply. D) Both answers B and C are correct. E) Both answers A and B are correct.
Why does redistribution, so that the distribution of income is equal, bring about less total output?
A) Incentives to work are reduced. B) No one can determine marginal benefit or marginal cost as a result. C) Those in political power will likely receive a larger income. D) Because the marginal benefit and marginal cost of work have been equally increased. E) The premise of the question is incorrect because an equal distribution of income would increase rather than decrease the total amount produced.
An important factor in the decline of the U.S. textile industry over the past 100 or so years is
a. foreign competitors that can produce quality textile goods at low cost. b. lower prices of goods that are substitutes for clothing. c. a decrease in Americans' demand for clothing, due to increased incomes and the fact that clothing is an inferior good. d. the fact that the minimum wage in the U.S. has failed to keep pace with the cost of living.
Recessions are not associated with which of the following?
a. increased bankruptcies b. falling profits c. falling incomes d. falling unemployment