How do nonprice-level factors that change total spending in an economy affect the aggregate demand curve?
a. The entire curve shifts leftward or rightward.
b. There is movement along the curve.
c. The curve becomes perfectly vertical.
d. The entire curve develops an upward slope.
a. The entire curve shifts leftward or rightward.
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$100 is to be divided among two individuals—Mary and Jenna. Which of the following allocations is Pareto efficient?
A) Mary receives $45, and Jenna receives $45. B) Mary receives $20, and Jenna receives $75. C) Mary receives $1, and Jenna receives $99. D) Mary receives $90, and Jenna receives $9.
Moral hazard occurs when an agreement encourages undesirable behavior
Indicate whether the statement is true or false
If planned aggregate expenditure (PAE) in an economy equals 1,000 + 0.9Y and potential output (Y*) equals 9,000, then this economy has:
A. no autonomous expenditure. B. an expansionary gap. C. no output gap. D. a recessionary gap.
In analyzing the operation of a firm, an economist assumes the firm wants to
A. maximize total profits. B. maximize total revenue. C. maximize total production. D. maximize total sales.