In Country B, the government simultaneously decreases its expenditures by $25 billion and decreases taxes by $25 billion. If the MPS is equal to 0.2, the government's action ________ real GDP by ________.
A. has no effect on; $0
B. increases; $125 billion
C. decreases; $125 billion
D. decreases; $25 billion
Answer: D
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On the graph above, consider a point A on the aggregate supply curve and above the aggregate demand curve. At this point, ________
A) quantity demanded equals output, but the inflation rate will fall, so output will rise B) quantity demanded is greater than quantity supplied, so the inflation rate will rise C) output is greater than the quantity demanded, so output will fall D) the aggregate demand curve will shift to the right until quantity demanded is equal to quantity supplied E) none of the above
When negative externalities are present in a market,
a. producers will be affected but consumers will not. b. producers will supply too much of the product. c. demand will be too high. d. the market will still maximize total benefits.
Along a straight-line downward-sloping demand curve, a decrease in the market price of a good:
A) will cause no change in consumer surplus. B) will increase consumer surplus. C) will decrease consumer surplus. D) may either decrease or increase consumer surplus.
The fact that U.S. managers' salaries are about four times higher than those of comparable managers in Japan, where banks control firms more closely, is probably:
A. an example of X-inefficiency in Japan. B. due to the fact that there are more natural monopolies in the United States. C. an example of the monitoring problem in the United States. D. due to the fact that the U.S. economy is much less competitive.