The relationship that tells us how much a person intends to spend at various levels of income is
A. the expenditure function.
B. the autonomous spending function.
C. the consumption function.
D. the income function.
Answer: C
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When jobs are easy to find, wage increases are frequently given, and businesses are doing well, the economy is most likely in a(n):
A. expansion. B. surplus. C. depression. D. recession.
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
If the Fed wishes to increase nominal interest rates, it must engage in an open market ________ of bonds to ________ the money supply.
A. sale; increase B. sale; keep constant C. sale; decrease D. purchase; increase
Suppose that in a perfectly competitive market, firms are making economic profits. In the long run, we can expect to see:
a. some firms leave. b. the market price rise. c. market supply shift to the left. d. economic profits become zero. e. production levels remaining the same as in the short-run.