Refer to Figure 18.1. Which of the following would most likely cause a shift from AD3 to AD2?

A. An increase in transfer payments because of a recession.
B. An increase in the reserve ratio.
C. An increase in taxes.
D. A decrease in the discount rate.


Answer: C

Economics

You might also like to view...

In July 2008, the Federal Communications Commission approved the merger of satellite radio providers XM Satellite and Sirius Satellite Radio, establishing a single satellite radio company in America

Under the terms of the deal, the companies agreed not to raise prices for the next three years. Why would the FTC require prices not to increase for three years? A) Compared to competition, monopolies are always worse for consumers. B) Compared to competition, monopolies restrict output and charge higher prices. C) Compared to competition, monopolies increase prices and output. D) Compared to competition, monopolies restrict output and charge lower prices.

Economics

A temporary decrease in government purchases in the classical model would

A) shift the production function to the left. B) shift the marginal product of labor curve to the right. C) shift the labor demand curve to the left. D) shift the labor supply curve to the left.

Economics

The term that refers to the price level rising at a low rate is

a. hidden inflation b. creeping inflation c. repressed inflation d. disinflation e. deflation

Economics

Explain the view that income inequality can actually increase the income of the poor

Economics