Two products are substitutes if:
A. an increase in the price of one causes buyers to demand less of the other.
B. an increase in the price of one causes buyers to demand more of the other.
C. a decrease in the price of one causes buyers to demand more of the other.
D. individuals consume the goods together.
B. an increase in the price of one causes buyers to demand more of the other.
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Suppose that the marginal propensity to consume is 0.75
a. If the government decreases spending by $500 billion, what is the change in output? b. If the government decreases taxes by $500 billion, what is the change in output? c. If the government decreases transfer payments by $500 billion, what is the change in output? d. If the government decreases spending by $500 billion and at the same time decreases taxes by $500 billion, what is the change in output?
If the economy is in a recession, in an effort to move the economy to the long-run equilibrium, the government could:
A. increase spending to increase aggregate demand. B. decrease spending to decrease aggregate demand. C. increase spending to decrease aggregate demand. D. decrease spending to increase aggregate demand.
When market price is below equilibrium price
A. a shortage is generated. B. market price will rise. C. quantity demanded is greater than quantity supplied. D. All of the choices are correct.
When the interest rate is above the equilibrium level,
a. the quantity of money that people want to hold is less than the quantity of money that the Federal Reserve has supplied. b. people respond by buying interest-bearing bonds or by depositing money in interest-bearing bank accounts. c. bond issuers and banks respond by lowering the interest rates they offer. d. All of the above are correct.