When comparing a? $100 billion increase in government expenditure to a? $100 billion decrease in tax? revenue, the effect of the increase in government expenditure on aggregate demand is
A) greater than the effect of the tax decrease.
B) equal to the effect of the tax decrease.
C) less than the effect of the tax decrease.
D) positive whereas the effect of the tax decrease is negative.
E) negative whereas the effect of the tax decrease is positive.
Answer: A) greater than the effect of the tax decrease.
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Refer to Figure 17-2. Suppose the economy is at point B in the figure above. Which of the following is true?
A) The economy is producing at potential GDP. B) The current unemployment rate is 5%. C) Expected inflation and actual inflation are the same. D) The expected rate of inflation is 3%. E) The natural rate of unemployment is 3.8%.
Refer to Figure 4-5. What area represents the deadweight loss after the imposition of the ceiling?
A) C + E + J + H B) C + E C) G + H D) J + H
On the 45-degree line diagram, for points that lie below the 45-degree line
A) planned aggregate expenditure is less than GDP. B) planned aggregate expenditure is greater than GDP. C) planned aggregate expenditure is equal to GDP. D) planned aggregate expenditure is less than aggregate income.
Assuming the inverse demand function for good Z can be written as P = 90 - 3Q, the corresponding total revenue function is:
A) 6Q. B) 90 - 6Q. C) 90 - 3Q. D) 90Q - 3Q2.