In the simple Keynesian aggregate expenditure model of an economy, changes in investment or government spending will lead to a change in which of the following?
A) the price level
B) the level of output and employment
C) interest rates
D) the aggregate supply
E) the demand for money
Ans: B) the level of output and employment
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Bonds are
A) equity. B) equity and debt. C) debt. D) paid dividends.
If there is a decrease in world oil prices and the Fed wishes to maintain output stability, what should it do?
a. Buy bonds in the open market. b. All the economy to adjust itself. c. Sell bonds in the open market. d. Impose higher taxes to counteract the supply shock. e. Lower taxes to maintain output.
The law of diminishing marginal utility implies that the marginal utility of my fifth hot dog is less than the marginal utility of my second soda
Indicate whether the statement is true or false