Refer to Figure 10.3. If autonomous investment spending drops by enough to shift the aggregate demand curve from AD1 to AD2, the multiplier effect is likely to
A. Create a second induced shift from AD2 to AD3.
B. Create a second induced shift from AD2 back to AD1.
C. Have no effect on the AD curve.
D. Create a second induced shift from AD2 to AD0.
Answer: A
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If we compare the last 30 years of inflation as recorded by the CPI and the PCE price index, we find that the
A) two measures fluctuate together. B) CPI inflation rate has consistently been at least 5 percentage points above the PCE price index inflation rate. C) PCE price index inflation rate has consistently been at least 5 percentage points above the CPI inflation rate. D) two measures give very different inflation rates for most years. E) the CPI inflation rate was always positive, but the PCE price index inflation rate was frequently negative.
Refer to Table 4-4. If a minimum wage of $10.00 is mandated there will be a
A) shortage of 20,000 units of labor. B) surplus of 40,000 units of labor. C) shortage of 40,000 units of labor. D) surplus of 20,000 units of labor.
While many analysts defended the actions taken by the Fed and the Treasury to respond to the financial crisis in 2008, others were critical of these actions. The critics were concerned that by not allowing large firms to fail
A) stockholders and bondholders of these firms were not allowed to receive the proceeds from the sale of assets that would have occurred if the firms had declared bankruptcy. B) there is an increased likelihood that other firms will engage in risky behavior in the future with the expectation that they will also not be allowed to fail. C) there will be less competition in the U.S. economy, which could led to higher prices for consumers. D) smaller firms will resent not receiving similar assistance.
When net capital outflows are negative,
A) capital inflows are greater than capital outflows. B) net factor payments must be positive. C) the current account must be negative. D) foreign direct investment must be greater than foreign portfolio investment.