What is the aggregate demand curve? What is the character of its slope?
What will be an ideal response?
The aggregate demand curve shows the relationship between the price level and real domestic output (real GDP). It shows the amounts of real output that domestic consumers, businesses, government, and foreign buyers collectively desire to purchase at each price level. As the price level increases, the amount of real domestic output purchased will decrease, so the aggregate demand curve is down sloping.
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Suppose Spam is an inferior good. If the U.S. economy hit bad times, and demanders' incomes were to fall, which of the following would tend to occur?
A) Spam sales would increase. B) Spam demand would decrease. C) The price of Spam would increase. D) Both A and C above. E) Both B and C above.
When the government uses a private subsidy in a market with an external benefit, to reach the efficient quantity of production, the subsidy must be equal to the marginal
A) social benefit. B) cost of production. C) private benefit. D) external benefit. E) external cost.
A seller's reservation price is generally equal to:
A. the seller's marginal cost. B. the buyer's reservation price. C. the market price. D. the seller's average cost.
Between 1994 and 2000 the poverty rate ____ and the number of people on welfare _____.
Fill in the blank(s) with the appropriate word(s).