Market failure establishes a basis for:
a) Government intervention.
b) Private goods.
c) Market power.
d) Externalities.
Answer: a) Government intervention.
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Goods are distributed among people by means of
A. a central authority. B. prices. C. markets. D. All of these are correct.
The economy is at full employment. If aggregate demand increases,
A) an inflationary gap is created and the AS curve shifts leftward as the money wage rate rises. B) an inflationary gap is created and the AD curve shifts leftward. C) an inflationary gap is created and potential GDP increases to close the ga
According to the interest-rate-based transmission mechanism for monetary policy, a decrease in the money supply will cause the
A) interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand.
B) interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
C) interest rate to rise, causing planned real investment spending to fall and leading to a decrease in aggregate demand.
D) interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
If you were to use an Aggregate Supply - Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a positive aggregate demand shock, you would seethe aggregate demand curve move
A. to the right, back toward its pre-shock position as a result of these policies. B. to the left as a result of the shock. C. back toward its pre-shock position as a result of these policies. D. to the right as a result of the shock.