A decrease in demand will cause a decrease in price, which will cause a decrease in supply
a. True
b. False
Indicate whether the statement is true or false
False
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Keynesians assume that there is a powerful direct link between aggregate demand and
A) velocity. B) real money balances. C) exogenous investment spending. D) interest rates.
Stabilization policies can best be described as policies that
A. attempt to eliminate recession and/or inflation in the economy. B. use changes in government spending to promote an equitable income distribution. C. use changes in the money supply to lower income tax rates. D. eliminate poverty through the adoption of work incentives.
What is the change in consumer surplus after trade as shown in Exhibit 2?
a. – b – c
b. – b – c – e – f
c. + e + f
d. + b + c
Suppose diamonds have an absolute price elasticity of 0, the demand for the good is
A. unit elastic. B. inelastic. C. perfectly inelastic. D. elastic.