If the MPC is 0.8 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $120 billion will eventually shift the aggregate demand curve to the right by
a. $216 billion.
b. $150 billion.
c. $600 billion.
d. $480 billion.
c
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Since lower-income people spend a larger proportion of their incomes on groceries than do higher-income people, if grocery stores were required by law to charge a 10-cent fee for disposable bags, this fee could be considered a
A) progressive tax. B) proportional tax. C) regressive tax. D) income tax.
Keynesians and monetarists share the belief that
a. recessions are caused by falls in aggregate demand. b. the demand for money is stable. c. excess demand is a chronic problem in modern economies. d. the Federal Reserve is responsible for most recessions. e. stabilization policy is beneficial.
A choice architect is someone who:
A. determines which choices are available to builders in a specific area. B. designs areas that have a lot of choices in determining how the space is used. C. is in a position to shape the decision-making environment. D. determines how people should make decisions inside of a specific environment.
In the short-run macro model, rising GDP and a falling interest rate are most likely to be the result of a(n)
a. increase in the money supply b. decrease in the money supply c. increase in government purchases d. decrease in government purchases e. decrease in taxes