Refer to the information provided in Figure 27.3 below to answer the question(s) that follow.
Figure 27.3Refer to Figure 27.3. Assume the economy is currently at Point A on aggregate supply curve AS1. A decrease in inflationary expectations that causes firms to decrease their prices
A. moves the economy to Point C on aggregate supply curve AS1.
B. moves the economy to Point B on aggregate supply curve AS1.
C. shifts the aggregate supply curve to AS0.
D. shifts the aggregate supply curve to AS2.
Answer: C
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Between 2000 and 2007, many Americans borrowed more money than they could afford to pay back. What was the impact of this borrowing on the economy?
A. An immediate reduction in the profits of lenders B. Increased economic growth C. Large losses at financial institutions D. Reduced interest rates
Direct regulation is inefficient because:
A. it does not take into account that the costs of reducing consumption are the same for all individuals. B. affected firms ignore regulations, for example, by dumping toxic waste illegally. C. it does not take negative externalities into account. D. it does not take into account the fact that the costs of reducing consumption may differ among individuals.
Because the Federal Reserve System is a central bank, it provides banking services to
A) no one. B) consumers and business. C) commercial banks. D) the government only. E) businesses only.
An increase in the interest rate
A) lowers the present value of future revenue. B) increases the present value of future revenue. C) has no effect on the present value of future revenue. D) shifts the demand curve for capital leftward.