When the average price of videocassette recorders (VCRs) falls, the result is
A. an increase in the quantity of VCRs demanded.
B. an increase in the quantity of VCRs supplied.
C. a decrease in the quantity of VCRs demanded.
D. an increase in supply of VCRs.
Answer: A
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The great failure of activist fiscal policy in the 1960s was its
A) timidity in the face of persistent stagnation. B) over-reliance on tax cuts to the exclusion of government spending programs. C) delay in reversing course as the economy became overstimulated. D) limited role as an accommodator of an activist monetary policy.
Why didn't the Fed's quantitative easing policies exert a stronger impact on aggregate demand and lead to a more rapid recovery during 2010-2012?
a. The low interest rates accompanying the policy failed to increase stock prices. b. Even though the Fed made additional reserves available to the banking system, the policy did not result in lower interest rates. c. The velocity of money increased, partially offsetting the impact of the Fed's low interest rate policy. d. The earnings of senior citizens and others from money market accounts, saving deposits, and other forms of savings fell, reducing their incentive to spend and thereby increasing aggregate demand.
The ________ balance includes purchases and sales of financial assets to and from citizens and companies of other countries.
A. capital account B. investment account C. current account D. none of these
In the third quarter of 2008, investment in the US totaled $1.4 trillion and in 2007, investment was $1.3 trillion. In addition, third quarter real GDP was $11 trillion. Suppose the MPC in the US is 0.8. ignoring the effects of imports and taxes, the multiplier is __________ and the change in investment will decrease equilibrium expenditure by __________.
a) 2; $1 trillion b) 5; $1 trillion c) 2; $200 million d) 5; $500 million