The aggregate demand curve is downward sloping because an increase in the general price level will cause the demand for money, interest rates, and investment to change in which of the following ways?
A) Increase/Increase/Increase
B) Increase/Increase/Decrease
C) Increase/Decrease/Increase
D) Decrease/Increase/Decrease
E) Decrease/Decrease/Increase
Ans: B) Increase/Increase/Decrease
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Which of the following is NOT a direct determining factor of consumers' purchase decisions?
A) Consumers' tastes and preferences B) Market price of the finished goods C) Cost of factor inputs D) Consumers' income
John Maynard Keynes ________
A) questioned the classical view that economies move quickly to their long run equilibrium levels B) advocated focusing on short run fluctuations C) carved out macroeconomics as a distinct field in the 1930s D) all of the above E) none of the above
In practice, it is usual to assume that, in explaining the impact of a change in interest rates ________
A) the substitution effects outweigh the income effects B) the income effect outweighs the substitution effect C) the income and substitution effects cancel out with one another D) the income effect increases the severity of the substitution effect
Suppose an economist develops a theory that higher food prices arise from higher gas prices. According to the scientific method, which of the following is the economist's next step?
a. Collect and analyze data. b. Go to a laboratory and generate data to test the theory. c. Publish the theory without testing it. d. Consult with other economists to see they agree with the theory.