A sharp rise in household wealth will cause:
a. Aggregate demand to fall
b. Aggregate demand to rise
c. Aggregate supply to fall
d. Aggregate supply to rise
Answer: b. Aggregate demand to rise
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Refer to Figure 3-4. If the current market price is $25, the market will achieve equilibrium by
A) a price increase, increasing the quantity supplied and decreasing the quantity demanded. B) a price decrease, decreasing the supply and increasing the demand. C) a price increase, increasing the supply and decreasing the demand. D) a price decrease, decreasing the quantity supplied and increasing the quantity demanded.
In presenting the idea of a demand curve, economists presume the most important variable in determining the quantity demanded is:
A. the price of the product itself. B. consumer income. C. the prices of related goods. D. consumer tastes.
If international financial transactions are prohibited
A. exchange rates cannot remain fixed. B. borrowers in poorer countries will probably pay low interest rates. C. lenders in the richer countries will probably earn high rates of return. D. lenders in the richer countries will probably earn low rates of return.
Which of the following is TRUE?
A) Monopoly results in a higher quantity of output being sold compared with perfect competition. B) Price discrimination occurs when there are differences in prices that reflect differences in marginal cost. C) Charging all customers the same price when costs vary can actually be a case of price discrimination. D) Price discrimination guarantees that the monopolist will make a profit.