According to Keynes, aggregate supply and aggregate demand will be equal only if
A. savings equals investment.
B. savings exceeds investment.
C. investment is larger than savings in the economy.
D. is not related to the relationship between savings and investment.
A. savings equals investment.
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Refer to Figure 7-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied?
A) Q0 B) Q1 C) Q2 D) Q2 - Q0
Which of the following is an example of moral hazard?
a. a driver is arrested for drunk driving b. a pet-sitter being paid to walk a dog for one hour per day only walks the dog for 20 minutes per day c. a thief steals a car d. All of the above are examples of moral hazard.
Equilibrium requires two conditions: (1) that income equals output in the economy, and (2) that in equilibrium, aggregate expenditure (or consumption in this example) equals output. Explain why both of these are assumed to be true.
What will be an ideal response?
Workers and firms both expect that prices will be 3% higher next year than they are this year. As a result
A) workers will be willing to take lower wages next year. B) the purchasing power of wages will rise if wages increase by 3%. C) the short-run aggregate supply curve will shift to the left as wages increase. D) aggregate demand will increase by 3%.