For an economy starting at potential output, an increase in one or more of the components of aggregate expenditure in the short run results in a(n):
A. increase in potential output.
B. recessionary output gap.
C. decrease in potential output.
D. expansionary output gap.
Answer: D
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Which of the following is given in the video as an example of a negative real shock to the economy?
A. A technological advance that increases investment B. A rapid rise in the price of oil C. A decrease in consumer confidence D. A stretch of very bad weather
If prices are inflexible, monetary policy:
A. affects real income but not nominal income. B. affects both nominal and real income. C. does not affect real or nominal income. D. affects nominal income but not real income.
What is the highest bond rating assigned by Standard and Poor's?
A. EEE B. A C. AAA D. AA
Beth really wants to get in shape, but just can't seem to ever get herself to the gym. An example of a commitment device Beth could use would be:
A. to make arrangements to meet with an exercise buddy every day at the gym to work out together. B. to spend time before going to the gym doing something she really enjoys doing, like seeing a movie. C. to allow herself one dessert for each visit to the gym. D. None of these is a commitment device.