Make a list of things that would shift the aggregate demand curve to the right
Examples (and variations on examples) in the text include a stock market boom that increases consumption spending, a tax cut that increases consumption, improvements in capital goods such as computers that increase investment, increased optimism about the future of the economy induces increased investment, an investment tax credit, an increase in the money supply, an increase in government defense expenditures, and economic expansions overseas that create increases in net exports.
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Average variable cost is equal to
A) average total cost minus average fixed cost. B) average total cost multiplied by output. C) total cost divided by output. D) the change in total cost divided by the change in output.
Suppose a mechanic uses $150,000 of his own money to start a business. The rate of interest he could earn in a savings account is 5 percent, and the rate of interest he could earn by investing in bonds is 8 percent. What is the opportunity cost of capital when the mechanic uses his money to start his own business?
a. $7,500/year b. $8,000/year c. $19,500/year d. $12,000/year e. $150,000/year
Suppose you observe that with a given supply curve, the Peruvian demand for Argentinean pesos steadily decreases. This will most likely mean:
a. the supply of Peruvian nuevos soles has increased on the foreign exchange market. b. the Argentinean peso will appreciate in value relative to the Peruvian nuevo sol. c. the Argentinean peso will depreciate in value relative to the Peruvian nuevo sol. d. the Peruvian demand for Argentinean goods has increased. e. the supply of Argentinean pesos has increased on the foreign exchange market.
When the price of Good X increases by 10 percent, the quantity demanded of Good Y increases by 25 percent. The cross elasticity between these two goods is
A. 0.4 and they are complements. B. 2.5 and they are complements. C. 0.4 and they are substitutes. D. 2.5 and they are substitutes.