How will a cut in a fixed tax affect the consumption schedule?
a. It will shift downward.
b. It will shift upward.
c. It will become flatter.
d. It will become steeper.
b
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
If the stock market crashes, then
a. aggregate demand decreases, which the Fed could offset by purchasing bonds. b. aggregate demand decreases, which the Fed could offset by selling bonds. c. aggregate demand increases, which the Fed could offset by selling bonds. d. aggregate demand increases, which the Fed could offset by purchasing the money supply.
The Consumer Price Index (CPI) is constructed by
What will be an ideal response?
Assume that the marginal cost of growing pine trees does not include the benefit to the environment as a result of carbon dioxide reduction. By producing where P = MC, the grower will be producing ________ the efficient amount of pine trees.
A. more than B. less than C. exactly D. sometimes more and sometimes less than