Use the following graph to answer the next question.
When output increases from Q1 and the price level decreases from P1, this change will ________.
A. be caused by a shift in the aggregate supply curve from AS1 to AS2
B. result in a movement along the aggregate demand curve from e3 to e1
C. result in a movement along the aggregate demand curve from e1 to e2
D. be caused by a shift in the aggregate supply curve from AS1 to AS3
Answer: D
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Which of the following assets is most liquid?
a. Funds in a checking account. b. A car. c. A home. d. A municipal bond.
In its conduct of open market operations, the Fed now buys and sells
a. only U.S. government securities. b. only mortgage-backed securities issued by large investment banks. c. a wide range of assets including the stock shares of large banks, domestic automobile manufacturers, and high-technology business firms. d. a wide range of assets including corporate bonds and mortgage-backed securities.
Which one of the following is a major difference between market and collective action through government?
a. Individuals are motivated by personal interests when making market choices, but they will be motivated primarily by the public interest when making collective choices. b. Competitive behavior is present when decisions are made in the marketplace, but competition is absent when choices are made collectively. c. Scarcity constrains output when decisions are made in the market sector, but scarcity is absent when goods are provided by the government. d. In the market sector, there is generally a one-to-one link between payment and consumption; this link is often absent in the government sector.
Economists who favor policy activism argue that the United States economy is NOT always in equilibrium because
A. the national debt is too large. B. the markets are over regulated. C. wage and price rigidities exist. D. the Federal Reserve's monetary policy is too restrictive.