An inferior good is
A. generally of low quality.
B. purchased in the underground economy.
C. is damaged or referred to as a "second".
D. purchased in declining quantities as income rises.
D. purchased in declining quantities as income rises.
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The circular flow shows that aggregate spending is larger than aggregate income because people save
Indicate whether the statement is true or false
The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal. What is the size of the aggregate surplus?
A. $4 billion B. $12 billion C. $10 billion D. $6 billion
The decision about whether to use tax or spending mechanisms to implement expansionary fiscal policy is, in part, a ________________ decision rather than a purely economic one.
a. individual b. political c. local d. state
A $100 increase in both government expenditure and taxes will
a. cancel each other out so that the equilibrium level of output will remain unchanged b. lead to a $100 decrease in the equilibrium level of output c. lead to a $100 increase in the equilibrium level of output d. lead to a greater than $100 increase in the equilibrium level of output e. lead to a less than $100 increase in the equilibrium level of output