For a normal good, if incomes rise, we would expect that the equilibrium price will increase and that the equilibrium quantity will increase
a. True
b. False
Indicate whether the statement is true or false
True
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
A decrease in the expected future domestic exchange rate causes the demand for domestic assets to shift to the ________ and the domestic currency to ________, everything else held constant
A) right; appreciate B) right; depreciate C) left; appreciate D) left; depreciate
Which of the following is NOT a key financial service provided by the financial system?
A) risk sharing B) profitability C) liquidity D) information
Appendix: An optimal incentives contract can induce the revelation of true costs in a partnership by
a. imposing penalties when costs are overstated b. offering bonus payments when costs are verified c. renewing the reliance relationship d. linking revealed cost to the partner's foregone expected profits e. enlisting third-party enforcement