Keynesian economists argue that monetary policy works through its effects on:
a. interest rates and investment.
b. price- and wage-flexibility.
c. budget deficits and trade deficits.
d. the spending and money multipliers.
a
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The ability of an individual, firm, or country to produce a certain good at a lower opportunity cost than other producers is referred to as:
A) marginal advantage. B) absolute advantage. C) cardinal advantage. D) comparative advantage.
If a monopoly firm is at a level of output where MC equals $10 and is increasing, MR equals $10, and average variable cost equals $9 . To maximize profits, the firm should: a. increase both output and price
b. increase output but decrease the price. c. decrease output and increase the price. d. not change either the output or the price.
Which of the following is the most accurate statement?
a. In the 1970s, the late 1980s, 1990s, and 2000s, the GDP deflator and the CPI both showed high rates of inflation. b. In the 1970s, both the GDP deflator and the consumer price index showed high rates of inflation, and in the late 1980s, 1990s, and 2000s, both measures showed low rates of inflation. c. In the 1970s, both the GDP deflator and the consumer price index showed low rates of inflation, and in the late 1980s, 1990s, and 2000s, both measures showed high rates of inflation. d. In the 1970s, the late 1980s, 1990s, and 2000s, the GDP deflator and the CPI both showed low rates of inflation.
(Advanced analysis) Assume that the MPS is .33 in an economy that has an aggregate supply curve with a slope of 1. An increase in investment spending of $10 billion will shift the aggregate demand curve rightward by:
A. $30 billion and increase real GDP by $15 billion. B. $30 billion and increase real GDP by $30 billion. C. $10 billion and increase real GDP by $30 billion. D. $10 billion and increase real GDP by $10 billion.