Individual demand curves are summed vertically to obtain the market demand curve
a. True
b. False
Indicate whether the statement is true or false
False
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If there is an improvement in technology that affects only Aggregate Supply and a nation's wealth falls due to sagging stock market, then:
a. Aggregate demand rises, but aggregate supply does not change. b. Aggregate demand falls, and aggregate supply rises. c. Aggregate demand and aggregate supply rise. d. Neither aggregate demand nor aggregate supply change. e. Aggregate demand rises, and aggregate supply falls.
Which of the following correctly describes the time-inconsistency problem?
a. The problem that arises when policy makers have an incentive to announce one policy to influence expectations, but then pursue different policy once those expectations have been formed and acted on. b. The problem that arises when the president and Congress have an incentive to pursue policies that are different from those of the Fed. c. The problem that arises when consumer preferences change frequently over time such that a product considered highly desirable at one point would be considered undesirable after sometime. d. The problem that arises when firms increase supply of a product in anticipation of future increase in demand for the product, but suffers a heavy loss because of a steep fall in demand.
If unexpected news raised people's expectations of a corporation's future dividends and price, then before the price changes this corporation's stock would be
a. overvalued, so its price would rise. b. overvalued, so its price would fall. c. undervalued, so its price would rise. d. undervalued, so its price would fall.
Foreign aid:
A. provided by developed countries to developing countries represents about 10 percent of the GDP of developed countries. B. is an important source of funding for investment in most developing countries. C. does not contribute much to domestic investment in most developing countries. D. is largely wasted in most developing countries because it comes with no strings attached.