Suppose investment spending falls. To offset the change in output the Federal Reserve could
a. increase the money supply. This increase would also move the price level closer to its value before the decline in investment spending.
b. increase the money supply. However, this increase would move the price level farther from its value before the decline in investment spending.
c. decrease the money supply. This decrease would also move the price level closer to its value before the decline in investment spending.
d. decrease the money supply. However, this increase would move the price level farther from its value before the decline in investment spending.
a
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In the long run, firms in a competitive market
A) shut down because profit goes to zero. B) lose money. C) are not profit maximizing. D) earn zero economic profit.
The slower the marginal utility declines as more of a good is consumed the:
A. larger the opportunity cost of the good. B. smaller the elasticity of demand. C. smaller the opportunity cost of the good. D. greater the elasticity of demand.
If the economy is experiencing unemployment, then the most appropriate government policy would be to:
A. shift the aggregate demand curve by using a tax increase coupled with spending cuts. B. shift the aggregate demand curve by using a tax increase coupled with more spending. C. shift the aggregate supply curve by using a tax cut coupled with spending cuts. D. shift the aggregate demand curve by using a tax cut coupled with more spending.
For endangered species, the federal government
A. has the right to regulate activities on private land to save the species from extinction. B. will capture a pair of animals so that the species does not become extinct. C. can only protect the animal on federal property because of common property issues. D. turns over the protection of an endangered species to the state authorities where the species lives.