According to real-business-cycle theory, recessions are caused by:
A. Deviations of aggregate supply from long-term growth trends
B. Monetary factors affecting aggregate demand
C. People choosing leisure rather than work
D. A decline in the supply of money
A. Deviations of aggregate supply from long-term growth trends
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Refer to Figure 4-3. At the price P2, consumers are willing to buy the Q2 pounds of granola. Is this an economically efficient quantity?
A) Yes, because the price P2 shows what consumers are willing to pay for the product. B) No, the marginal benefit of the last unit (Q2 ) exceeds the marginal cost of that last unit. C) Yes, otherwise consumers would not buy Q2 units. D) No, the marginal cost of the last unit (Q2 ) exceeds the marginal benefit of the last unit.
There are two conditions necessary for a consumer to maximize her utility. One is that the marginal utilities per dollar spent on each good and service consumed are equal. What is the other condition?
A) The prices of each good and service consumed must not be too high. B) Total spending on all goods and services must equal the amount available to be spent. C) The consumer must be satisfied with the choices she makes. D) The total spent on each good and service is the same.
The trade-off between the present and future consumption is measured by
A) the money cost of both the present and future consumption. B) the foregone present consumption. C) the difference between the money price of future goods and the money cost of producing them. D) the difference between the money price of present goods and the money cost of producing them.
The government might increase its spending to end a recession because:
A. allowing the short-run aggregate supply to adjust since back to the long-run can take a long time. B. the economy experiences lower prices at the long-run equilibrium. C. the economy enjoys a higher level of output in the long run. D. None of these justify why the government might change its spending to end a recession.