Fiscal stimulus is:
A. An increase or decrease in government spending.
B. An increase in government spending or a decrease in taxes.
C. Achieved when government dollars are spent on consumer goods but not on military goods.
D. The difference between equilibrium output and full-employment output.
B. An increase in government spending or a decrease in taxes.
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In the short-run, if the Federal Reserve decreases interest rates, then consumption and investment ________, aggregate expenditure ________, and short-run equilibrium output ________.
A. increase; increases; increases B. increase; increases decreases C. decrease; decreases; decreases D. increase; decreases; decreases
The present value of an asset and the rate of interest
a. are not related b. are related inversely c. cannot change in opposite directions d. are equivalent e. are directly related
While waiting in line to buy one cheeseburger for $1.50 and a medium drink for $1.00, Sally notices that she could get a value meal that contains both the cheeseburger and medium drink and also a medium order of fries for $2.75 . She thinks to herself, "Is it worth the extra 25 cents to get the medium fries?" To an economist, Sally's decision is an example of
a. marginal decision making. b. basing decisions on total, rather than marginal, value. c. an unintended consequence. d. the fallacy of composition.
The investment demand curve will shift to the right as a result of a(n):
a. Decrease in the acquisition and maintenance cost of capital goods b. Increase in the excess productive capacity available in the industry c. Increase in taxes businesses pay to government d. Decrease in the confidence of business leaders about the economy