Which of the following will cause the demand curve for a good to shift to the right?
A. Decrease in income for a normal good.
B. Increase in the price of a complementary good.
C. Decrease in the price of the good.
D. Increase in the price of a substitute good.
Answer: D
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If the incomes of New Englanders increased and they demanded more tobacco, then tobacco would be:
a. a normal good. b. an inferior good. c. a substitute good. d. a complementary good.
What is the most compelling evidence for the Keynesian interpretation of the Great Depression?
a. Increases in both the interest rate and the quantity of money b. Decreases in both the interest rate and the quantity of money c. An increase in the interest rate and a decrease in the quantity of money d. A decrease in the interest rate and an increase in the quantity of money
Which of the following makes the official measure of unemployment in the U.S. an understatement of actual unemployment?
a. Some workers become discouraged and are not actively seeking work. They are officially counted in the labor force as unemployed. b. The official measure of civilian unemployment fails to account for very high levels of unemployment among active-duty military personnel. c. The statistics count part-time employment as being no different from full-time employment. d. The official measure counts all part-time workers as unemployed.
According to classical economic theory
A. deficit financing is the only effective remedy for recession. B. fiscal policies are more effective than monetary policies as economic stabilization tools. C. if the economy is experiencing excessive inflation, the government should raise taxes and/or cut expenditures. D. falling wages and prices would be the natural cure to recession.