Which one of the following is TRUE about the effects of fiscal policy?
A. An increase in government spending will increase aggregate demand.
B. An increase in government spending will reduce aggregate demand.
C. A decrease government spending will increase aggregate supply.
D. A tax change does not have any direct or indirect effects on aggregate demand.
Answer: A
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Real GDP per person equals average labor productivity:
A. times one minus the unemployment rate. B. times the share of population employed. C. times the labor force participation rate. D. minus the share of population employed.
The figure above shows a perfectly competitive firm. In the short run, the firm will shut down
A) only if the AVC of producing 10 units is less than $20. B) only if the AVC of producing 10 units is more than $20. C) only if the AVC curve reaches its minimum before 10 units are produced. D) always.
When a consumer moves from a lower to a higher indifference curve, the marginal rate of substitution automatically increases
Indicate whether the statement is true or false
Which of the following indices best signals future movements in retail prices?
a. The implicit GDP deflator b. nominal GDP c. The consumer price index d. The producer price index e. The measure of economic welfare (MEW)