Which of the following will most likely increase aggregate demand?
a. a decrease in stock market prices
b. a lower real interest rate
c. a decrease in the expected inflation rate
d. a decrease in real GDP
B
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
The above figure shows a firm's total revenue line. The firm must be in a market with
A) perfect competition. B) monopolistic competition. C) monopoly. D) oligopoly.
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
An example of the moral hazard problem in international investment would be that
A. those seeking the funds are dishonest. B. those seeking funds for the riskiest projects are amongst those most actively seeking the funds. C. government officials may demand higher than the usual amount of bribes. D. the recipients of the funds may use the funds for riskier projects than the approved project.