If consumption increases in general the aggregate demand curve will:
A. remain unchanged but the economy will move down along the curve to a lower quantity.
B. shift straight down.
C. remain unchanged but the economy will move down along the curve to a higher quantity.
D. shift to the right.
Answer: D
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The figure illustrates the market for pens. The equilibrium quantity is
A) between 400 and 600 pens, but it is impossible to be precise. B) 5 pens a month. C) 2 pens a month. D) 500 pens a month.
Division of iron ore between the production of bridge girders and tanker drums is an example of
a. a distribution problem. b. production planning. c. input-output analysis. d. both output selection and distribution
When a currency is undervalued, international reserves ________ and the country has a balance-of-payments ________.
A. decrease; surplus B. increase; surplus C. increase; deficit D. decrease; deficit
Answer the following statement(s) true (T) or false (F)
1. The aggregate demand curve can shift to the right or left due to changes in price levels. 2. A decrease in a nation’s population will increase aggregate demand. 3. A fall in incomes abroad can reduce U.S. net exports and cause a leftward shift in the U.S. aggregate demand curve. 4. Input prices are said to be sticky in the long run. 5. The misperception effect involves a false perception about relative prices.