How does a decrease in government spending affect the aggregate expenditure line?
A) It increases the slope of the aggregate expenditure line.
B) It shifts the aggregate expenditure line downward.
C) It decreases the slope of the aggregate expenditure line.
D) It shifts the aggregate expenditure line upward.
B
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According to the production possibilities model, if more resources are allocated to the production of physical and human capital, then all of the following are likely to happen except
A) the country's total production will fall. B) future economic growth is enhanced. C) the production possibilities frontier will be shift outward in the future. D) fewer goods will be produced for consumption today.
A person is calculating his permanent income by adaptive expectations. Last year's permanent income was 38,000, this year's actual income is 44,000, and j = 0.25. This year his permanent income is
A) 39,500. B) 42,500. C) 59,000. D) 20,500
Suppose there is an oil supply shock to the U.S. economy due to an embargo by major oil producing nations. According to the real business cycle theory, the supply shock will, other things being equal
A. cause real Gross Domestic Product (GDP) to decline both in the short run and in the long run. B. push the economy into an expansionary phase of the business cycle. C. cause economy-wide deflation. D. push real Gross Domestic Product (GDP) upward in the short run but downward in the long run.
Using gabriels budget line and his indiference curves between horseback riding lessons and baseball lessons, and then changing the prices of each activity holding his income constant, which of the following can be derived?
a. demand curve b. net gain c. supply curve d. marginal benefit