Refer to Figure 9.2. A movement from point a to point d could be caused by a simultaneous ________ and ________
A) decrease in taxes; massive crop failure
B) increase in government spending; decrease in the price of oil
C) increase in taxes; increase in the price of oil
D) decrease in the money supply; decrease in government spending
B
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If featherbedding raises the price of output produced by the union workers, it
a. increases employment at the firm and in the industry b. decreases employment at the firm and in the industry c. increases employment at the firm but may decrease it in the industry d. decreases employment at the firm and increases it in the industry e. increases employment at the firm but reduces the number of firms so that there is no net effect on industry employment
According to the quantity theory of money, increasing the money supply:
A. leads to inflation. B. causes production to increase. C. leads to decreased spending. D. causes each dollar to be spent less often.
Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire
a. increased consumption, which shifts the aggregate-demand curve right. b. increased consumption, which shifts the aggregate-demand curve left. c. decreased consumption, which shifts the aggregate-demand curve right. d. decreased consumption, which shifts the aggregate-demand curve left.
If the Fed's policy reaction function equals r = .02 + ?, where r is the real interest rate and ? is the inflation rate. When the inflation rate is zero, then the real interest rate will be:
A. set to equal 4 percent. B. set to equal zero. C. below the target value for the real interest rate. D. set to equal 2 percent.