When investment increases, the ________ in aggregate demand is ________ the change in investment
A) increase; the same as
B) increase; greater than
C) decrease; greater than
D) decrease; the same as
E) increase; smaller than
B
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The best case scenario for fiscal policy is during a:
A. boom caused by an aggregate demand shock. B. recession caused by an aggregate demand shock. C. boom caused by a real shock. D. recession caused by a real shock.
If an economy's MPC is 0.8 and the MPM is 0.05, then an increase in government spending of $2,000 will increase income by
A. $5,500. B. $8,000. C. $10,000. D. $20,000.
What does research tell us about the impact of Ricardian equivalence effects on the economy?
A) Ricardian equivalence effects may exist, but their magnitudes are unclear. B) There is no evidence of any impact of Ricardian equivalence effects. C) Ricardian equivalence effects have a huge impact on aggregate demand. D) There is a very small impact on both aggregate demand and aggregate supply.
If the demand curve is a downward sloping straight line, the price elasticity of demand always
A) increases as the demand curve shifts rightward. B) increases as the demand curve shifts leftward. C) increases with movements upward along the demand curve. D) decreases with movements upward along the demand curve.