Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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A) firms are not counted in investment spending. B) firms are also counted in investment spending. C) households are also counted in investment spending. D) households and Firms are also counted in investment spending. E) foreign consumers are counter in investment spending.
Interest-rate risk is the riskiness of an asset's returns due to
A) interest-rate changes. B) changes in the coupon rate. C) default of the borrower. D) changes in the asset's maturity.
American automobile manufacturers and dealers appear to adjust the price (sticker prices plus financing charges) by periodically changing interest rates and by using rebates and surcharges as opposed to directly changing sticker prices
Assuming that they maximize their profits, this pricing approach may reflect A) a relatively low cost to adjust sticker prices. B) a relatively low cost to adjust advertising. C) a relatively high cost to adjust sticker prices. D) a relatively high cost of advertising.
Which of the following contributed to the sharp increase in Federal tax revenues between 1995 and 2001?
A) an increase in income tax rates B) a sustained economic expansion C) increased income inequality D) all of the above