An AD shift down can be cause by
A) a decrease in government spending.
B) an increase in money supply.
C) a decrease in the price level.
D) an increase in the price level.
Answer: A) a decrease in government spending.
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Explain how a currency drain affects the size of the money multiplier. In your explanation, suppose that a bank gains $1 million in new deposits and reserves
Further suppose that the desired reserve ratio is 10 percent and the currency drain is 50 percent.
According to some economists and policy makers, the solution to Spain’s high youth unemployment is to
a. reduce government-mandated wages, which would allow it to reduce government spending. b. increase government-mandated wages, which would allow it to reduce government spending. c. increase government-mandated wages, which would allow it to increase government spending. d. reduce government-mandated wages, which would allow it to increase government spending.
A public good is described, in part, as a good
A. that may be depleted if demand is heavy. B. that has a marginal cost at or near zero. C. that is essential to life. D. which has all of these characteristics.
Compared to ideal economic efficiency, when the production of a good generates external costs, competitive markets will result in an output that is too:
A. large and a price that is too high. B. large and a price that is too low. C. small and a price that is too high. D. small and a price that is too low.