In practice, one of the principal problems with aggregate demand management is that
A) changes in aggregate demand do not affect output.
B) changes in aggregate demand cannot reduce unemployment.
C) changes in aggregate demand are highly inflationary.
D) stabilization policies could increase aggregate demand too much and at the wrong times.
D
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Assuming the central bank follows a money supply target, then an increase in the demand for money
a. will shift the position of the LM schedule away from the predicted level even if the target level of the money supply is achieved. b. will shift the position of the LM schedule toward the predicted level as long as the target level of the money supply is achieved. c. may or may not shift the position of the LM schedule away from the predicted level even if the target level of the money supply is achieved. d. None of the above
Jim's Hardware Supply has theft insurance. Jim also has an alarm system. The alarm system has just recently malfunctioned. If Jim has the alarm system repaired, it will cost him $100. The probability of a theft occurring is p = 0.0001
If a theft occurs and there is no alarm system, the value of stolen materials will be $125,000. However, Jim's insurance will compensate him fully for the loss. No thefts will occur if the alarm system is in place. What is the expected cost to Jim of repairing the alarm system? What is the expected cost to society of not repairing the alarm system?
People often complain about price gouging after a disaster such as a hurricane. Suppose the government successfully prevented price increases due to the disaster. We would expect
A) reconstruction to take longer because the quantity supplied of new materials would increase more slowly. B) reconstruction to take less time because the demand for materials would increase faster. C) reconstruction never to occur. D) reconstruction to take less time because the government could rebuild more quickly when people are not in the way.
Which of the following would eliminate scarcity as an economic problem?
a. Moderation of people's competitive instincts. b. Discovery of sufficiently large new energy reserves. c. Resumption of steady productivity growth. d. None of these.