Keynes believed that for aggregate supply to equal aggregate demand at equilibrium GDP a necessary condition was that total _______ and total _______ must be equal.
Fill in the blank(s) with the appropriate word(s).
savings; investment
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Normative economics is
a. an event is explained according to the laws of economics. b. an explanation of the way things ought to be, the explanation involves a value judgement on the part of someone. c. the study of foreign countries. d. the study of our banking system.
Your local grocery store offers a coupon that reduces the price of milk during the coming week. The regular retail price of milk in the store is $3.00 per gallon, and the coupon price is $2.00 per gallon for the next week
If the store maximizes profits and the price elasticity of demand for milk is -2 for coupon users, what is the price elasticity of demand for non-users? A) -0.67 B) -1.0 C) -1.5 D) We do not have enough information to answer the question.
Which of the following is an appropriate fiscal policy prescription that addresses the inflation that occurs when the economy is above potential GDP?
a. Decreasing taxes to protect consumers from the effects of inflation b. Increasing taxes to reduce aggregate demand c. Increasing government spending to provide some of the goods that consumers can no longer afford at the higher prices d. Decreasing government spending to cause a decrease in the demand for money e. Increasing transfer payments to poor people, who are hurt the most by the inflation
If a country has a large percentage of its population under 15 years old, then compared with other countries, this creates
a. a problem because they consume more than they produce b. a problem because they cause more capital goods to be produced c. a benefit because they boost demand for consumption goods d. a benefit because they cause more capital goods to be produced e. neither a problem nor a benefit since age is irrelevant