An upward shift in the Fed's policy reaction function corresponds to a ________ the aggregate demand curve and an increase in exogenous spending corresponds to a ________ the aggregate demand curve.
A. shift left of; movement up
B. shift left of; shift right of
C. movement up; shift right of
D. shift right of; shift left of
Answer: B
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"A doubling of the price of gasoline in the 1970s did not reduce consumption one iota." The person making the above claim evidently thinks the demand for gasoline is
A) completely elastic. B) completely inelastic. C) greater than the supply. D) less than the supply. E) unit elastic.
The difference between nominal GDP and real GDP is
A) the indirect taxes used in their calculations. B) the prices used in their calculations. C) that nominal GDP includes the depreciation of capital and real GDP does not. D) that nominal GDP includes net exports of goods and services and real GDP includes net imports. E) that real GDP includes the depreciation of capital and nominal GDP does not.
An advantage of the partnership form of business organization is
A) its limited liability. B) its limited access to capital, thus reducing the possible size of debt. C) the ability of its owners to specialize. D) that it is difficult to start up, because a lot of thought has to go into the establishment of the firm.
The Federal Open Market Committee is important because
a. its deliberations are extremely private b. it sets the course for the nation's money supply c. it is composed of people who are most knowledgeable about the economy d. it discusses unemployment and inflation e. of its influence on fiscal policy