What shifts the short-run aggregate supply curve?
A. A change in the actual rate of inflation
B. A change in the actual level of real growth
C. A change in the expected level of real growth
D. A change in the expected rate of inflation
Ans: D. A change in the expected rate of inflation
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Investment banks differ from commercial banks in the fact that
A) investment banks work only with wealthy customers while commercial banks work only with private firms. B) commercial banks sell stocks on behalf of their customers while investment banks just finance loans. C) commercial banks issue stocks and bonds while investment banks do not. D) investment banks help other financial institutions and governments engage in financial markets while commercial banks work with individuals. E) commercial banks service the needs of local governments while investment banks work with the federal government.
A given change in disposable income would have the greatest effect on aggregate demand with which of the following marginal propensities to consume?
a. 0.4 b. 0.6 c. 0.8 d. 0.2
Suppose the government attempts to stimulate the economy by increasing spending without increasing taxes. Which of the following statements is most likely to be accepted by someone who believes in crowding out?
A) The government's actions will have their intended effect. B) The government's actions will cause businesses to become more optimistic about the economy, and they will increase their output even more than the government had intended. C) The government's actions will raise interest rates, causing decreased investment and consumption, and the economy will not expand as much as the government had intended. D) This is a trick question, because the federal government is required by law to increase taxes by the same amount as it increases expenditures.
Plastic and steel are substitutes in the production of automobiles. If steel prices go up, all other things unchanged:
A) the equilibrium price of plastic will fall. B) the demand curve for plastic will shift to the left. C) the demand curve for plastic will shift to the right. D) the equilibrium quantity of plastic demanded will increase and the equilibrium price will fall.