If the aggregate supply curve is upward sloping, then an increase in autonomous consumption leads to a(n)
A) increase in aggregate demand and a rise in the price level.
B) decrease in aggregate demand and a rise in the price level.
C) decrease in aggregate demand and a fall in the price level.
D) no change in aggregate demand and no change in the price level.
A
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Suppose that the total number of hours (T) is 720 and the wage rate is $10. Suppose further that all income is spent on consumption, so that the vertical axis is also total consumption.
(A) Sketch this graph. (B) Sketch the graph if a 5% consumption tax is imposed. (C) Can you say conclusively that a consumption tax will lower hours worked?
By the 1830s, young women and children
(a) were a very important portion of the industrial work force, about 40%. (b) were a minor portion of the industrial work force, about 10%. (c) were a moderate portion of the industrial work force, about 25%. (d) were not a part of the "industrial" work force because legislation forbade it in order to protect young women and children.
Which of the following would indicate that price is temporarily above its market equilibrium?
A) There are a number of producers who are left with unwanted inventories. B) There are a number of customers who are looking for a good but cannot find sellers. C) New firms decide to enter the market. D) The government must step in and impose a tax on the good.
According to the theory of rational expectations, errors in predicting inflation will
A. be biased upward more often than not. B. be purely random. C. tend to be biased downward when inflation is rising and tend to be biased upward when inflation is falling. D. tend to be biased upward when inflation is rising and tend to be biased downward when inflation is falling.