The dynamic aggregate demand curve has a negative slope for all of the following reasons except:
A. the fact that high rates of inflation are good for the stock market.
B. the reduction in real wealth caused by inflation.
C. the redistribution that occurs as inflation has a greater impact on the poor than it does on the wealthy.
D. higher current inflation leads policymakers to increase the real interest rate, which depresses various components of aggregate expenditures.
Answer: A
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During October and November 2008, gasoline prices were falling dramatically, making travel by car less expensive but air travel prices were as high as ever. What is TRUE about consumer preferences, possibilities, or choices?
A) The relative price of air travel in terms of travelling by car decreases. B) If travelling by car is a normal good, both the substitution and income effects would lead to a decrease in travelling by car. C) The consumers' budget line would shift outward and its slope would not change. D) If air travel is a normal good, both the substitution and income effects would lead to an increase in air travel.
A mortgage, where the monthly payments are the same for the duration of the loan, is an example of a(n):
A. installment loan. B. equity security. C. variable payment loan. D. fixed payment loan.
If the Congress passes legislation to decrease government spending to control demand-pull inflation, then this would be an example of a(n):
a. Nondiscretionary fiscal policy b. Automatic stabilizers c. Contractionary fiscal policy d. Expansionary fiscal policy
Risk-seeking behavior:
A. is an aspect of an individual's preferences. B. is irrational. C. is the same for everyone. D. All of these statements are true.