Aggregate expenditure includes consumption spending, planned investment spending, government purchases, and net exports
Indicate whether the statement is true or false
TRUE
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What effect will an increased demand for housing in the suburbs of a major city have on the cost of vegetable farming in the suburbs?
A) No effect, since one cannot grow vegetables on land on which housing has been constructed. B) The cost will decline because only very fertile land will now be used for growing vegetables. C) The cost will rise because it will become more expensive to grow vegetables. D) The cost won't change, because there has been no change in physical conditions. E) We cannot predict unless we know what has happened to the demand for vegetables.
In the late 1920s, the U.S. economy experienced a decrease in investment, which perhaps triggered the Great Depression. The decrease in investment
A) increased aggregate supply. B) decreased aggregate supply. C) increased aggregate demand. D) decreased aggregate demand. E) increased potential GDP.
In November 2012, HP claimed that they had weak earnings due to questionable accounting by a company that they had taken over. This is an example of:
A) market risk B) systemic risk C) idiosyncratic risk D) liquidity risk
Which of the following would not be considered a negative externality?
a. Smelter, Inc. creates steel and pollution. b. Your friend buys a new puppy that barks every night. c. You have an adverse reaction to a medication your doctor prescribed for you. d. Your neighbor plays loud music that you dislike through stereo speakers set up on his deck.