When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease.
B. prices, causing them to definitely rise.
C. output, causing it to definitely increase.
D. prices, causing them to definitely fall.
Answer: A
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In the Keynesian model, changes in the money supply cause changes in
A) saving. B) investment. C) government spending. D) aggregate supply.
The marginal principle states that one should
A) increase the level of an activity if the marginal benefit exceeds its marginal cost. B) if possible, pick the level at which the marginal benefit equals the marginal cost. C) decrease the level of an activity if the marginal cost exceeds the marginal benefit. D) all of the above
Suppose a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. If this price is between its average variable cost and average total cost curves, the firm will:
a. earn an economic profit. b. stay in operation in the short-run, but shut down in the long run if demand remains the same. c. shut down. d. none of these.
The supply of money increases when
a. the value of money increases. b. the interest rate increases. c. the Federal Reserve purchases bonds. d. velocity increases.