Using Figure 2 above, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE1 might be:
A. consumption increases.
B. export increase.
C. government spending decreases.
D. investment increases.
Answer: C
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If a $15 billion reduction in taxation produces a change of $20 billion in output, the value of the government taxation multiplier is ________
A) 35 B) 0.75 C) 5 D) 1.3
Economies with sustained high inflation generally have
A) very low unemployment rates. B) very low GDP growth rates. C) high rates of business investment. D) independent central banks.
Which of the following are complementary goods?
A) sport utility vehicles and gasoline B) butter and margarine C) beer and wine D) DVDs and videocassettes
People learn to hold a specific quantity of money for the groceries, theater tickets, gasoline, clothes, film, and other items they habitually purchase. This behavior is representative of the:
A. precautionary demand. B. speculative demand. C. transactions demand. D. volatility demand.