An increase in government spending will cause
A. AD to decrease (move to the left).
B. AD to increase (move to the right).
C. AS to increase (move down and to the right).
D. AS to decrease (move up and to the left).
Answer: B
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Distinguish between a change in demand and a change in quantity demanded
What will be an ideal response?
Suppose that the U.S. personal income tax was eliminated and replaced with a fixed tax that raised the exact same amount of revenue. The multiplier would be
a. larger. b. unchanged. c. smaller. d. incalculable.
Aggregate supply tends to grow because
a. there are more workers in the economy every year. b. there is more capital in the economy every year. c. technology tends to improve every year. d. All of the above are correct.
Which of the following is not an advantage of starting a new business as a sole proprietorship?
A) separation of ownership and business liability B) limited control over the operation of the business C) the initial cost in setting up the business D) possibility of double taxation