The wealth effect:
A. explains the downward-sloping aggregate demand curve.
B. is the positive relationship between consumer spending and the overall price level.
C. is not present when wages keep pace with inflation.
D. explains how the aggregate demand curve shifts.
A. explains the downward-sloping aggregate demand curve.
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Why is it possible that the economy will not self-correct out of a recessionary gap?
What will be an ideal response?
For the cost function C(Q) = 100 + 2Q + 3Q2, the marginal cost of producing 2 units of output is:
A. 3. B. 14. C. 2. D. 12.
Which of the following statements does not describe a perfectly competitive market?
A) A large number of firms are involved. B) Entry and exit are relatively easy. C) In the short run firms can earn profits, minimize losses, or earn a normal profit. D) Price is greater than marginal revenue.
The Fed generally had ________ interest rates in the 1970s and early 1980s to fight ________.
A. low; inflation B. high; recession C. low; recession D. high; inflation