Within the framework of the Keynesian model, if aggregate expenditures exceed aggregate output, then:
A. the inventories of firms would decline, and the firms would expand output in order to restore their inventories to desired levels.
B. the inventories of firms would increase, and the firms would reduce output until inventories were cut back to the desired level.
C. the current level of income would persist in the future.
D. firms would reduce their investment, and the economy would fall into a recession.
Answer: A
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According to this Application, one strategy proposed to deal with the rising expenses of government entitlement programs is for the government to save and invest now so as to reduce the burden on future generations. This strategy would
A) not change GDP, but shrink entitlement programs. B) increase GDP and eliminate entitlement programs. C) increase GDP, and entitlement programs would increase along with GDP. D) increase GDP and entitlement programs would decrease.
If advertising were used to strengthen brand loyalty, you would expect: a. demand for the product to become more elastic
b. consumers to become less sensitive to price differences among similar goods. c. firms to lower price in order to increase revenue. d. that consumer demand for related products would be unaffected.
From 1979-2007, the share of market income for the bottom 99 percent of U.S. households decreased.
Answer the following statement true (T) or false (F)
In the absence of any government regulation on price, if a firm has no power to set price on its own, one can safely conclude
A) the demand curve for the firm's product is horizontal. B) there aren't many firms in the industry. C) the market is in long-run equilibrium. D) the firms in this industry are not profitable.