Suppose that goods A and B are close substitutes and the price of good B falls. We would then expect an:
a. Increase in the quantity demanded of good B and a decrease in the demand for good A
b. Increase in the demand for good A and a decrease in the quantity demanded for good B
c. Increase in the demand for good A and the quantity demanded for good B
d. Increase in the demand for goods A and B
a. Increase in the quantity demanded of good B and a decrease in the demand for good A
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How are changes in inventory treated in GDP?
What will be an ideal response?
Which of the following best describes the simple spending multiplier? a. It shows the magnified change in planned aggregate spending that arises from a change in output
b. It shows the magnified change in equilibrium output demanded that arises from a change in income. c. It shows the magnified change in planned aggregate spending that arises from a change in equilibrium output. d. It shows the magnified change in equilibrium output demanded that arises from a given initial change in planned aggregate spending. e. It shows the change in planned aggregate spending that arises from a change in real output.
If the Fed is concerned about inflation, it should:
A. buy bonds or raise the discount rate. B. buy bonds or reduce the discount rate. C. sell bonds or raise the discount rate. D. sell bonds or reduce the discount rate.
Government can use its funds to purchase goods or transfer money to people.
a. true b. false