Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________
A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase
C
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In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, the income effect is the movement from point ________ to point ________
A) a; b B) b; d C) b; c D) a; c
Shelly purchases a leather purse for $400. One can infer that:
A. her reservation price was exactly $400. B. she paid too much. C. her reservation price was less than $400. D. her reservation price was at least $400.
Exclusive rights of ownership that allow the use, transfer, and exchange of property are called
A) common property rights. B) nonexclusive property rights. C) private property rights. D) public property rights.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary