If the government reduces spending ________
A) the IS curve will shift to the right
B) output will increase if interest rates remain fixed
C) consumption will increase
D) all of the above
E) none of the above
E
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Under what conditions would this level be efficient at the regional level?
Hypothetically, suppose a recent study of hazardous waste abatement (A) arrives at the following national estimates for abating chemical solvents: MSB = 100 – 0.75A and MSC = 20 + 0.50A, where A is measured in millions of tons per year, and costs are measured in millions of dollars.
Real GDP can increase either because the quantity of labor increases or because labor productivity increases. What is the effect on the standard of living if real GDP increases because
a. the quantity of labor increases? b. labor productivity increases?
Compared to a monopolistic competitor, a monopolist faces
A) a more elastic demand curve. B) a more inelastic demand curve. C) a demand curve that has a price elasticity coefficient of zero. D) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices.
The economy was initially in equilibrium at point 3 and interest rates increased by 4 percentage points because of government deficit financing. The public spending, however, improves business confidence and activity that exactly offsets the potential crowding-out effect. This situation would result in a new equilibrium at point:
Refer to the above graph.
A. 2
B. 3
C. 4
D. 5