Assume the economy is experiencing an inflationary gap, classical economists believe that:
a. flexible wages will restore full employment
b. the federal government should decrease spending to shift the aggregate demand curve leftward.
c. the Federal Reserve should lower the interest rate.
d. the federal government should increase spending to shift the aggregate demand curve rightward.
a
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An increase in taxes
a. reduces income by more than the total fall in consumption. b. reduces income by the same amount as the total fall in consumption. c. reduces income and consumption by the same amount as taxes fall. d. reduces income by the amount of the initial fall in consumption.
A monopoly will maximize profits at the level of output at which
A) MR = MC. B) MR = AFC. C) MC = ATC. D) MC = P.
According to an In The News article titled "Rivals Match Southwest's Flash Sale,"
A. Airlines will match their rivals' fares but are often slow to react because the firms prefer to sell at the higher price. B. Rival airlines put pressure on Southwest to retreat back to higher prices. C. Airlines often match their rivals' fares rather than risk losing price-sensitive passengers. D. American Airlines, Continental Airlines, and United Airlines matched Southwest's fare cuts, but US Airways, JetBlue Airways, and Delta Air Lines did not.
The Fed can change the money supply by buying or selling long-term Treasury bonds. Purchasing long-term securities is commonly called:
A. open market operations. B. discount operations. C. federal funds speculation. D. quantitative easing.