In the Keynesian model, an increase in government purchases affects output by
A) increasing labor supply, because workers feel effectively poorer.
B) increasing saving to pay for future taxes, lowering the real interest rate and shifting the IS curve to the left.
C) increasing the real interest rate due to crowding out, reducing aggregate demand.
D) increasing aggregate demand as national saving declines.
D
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We assume that in the short run in a perfectly competitive market firms:
A. can enter and exit the market. B. can enter, but not exit the market. C. can exit, but not enter the market. D. cannot enter or exit the market.
In the United States, the most recent use of wage and price controls occurred during the:
a. Nixon administration. b. Carter administration. c. Reagan administration. d. Clinton administration.
Given the following diagram:
If the actual market price were fixed at $6 per unit in the above diagram
A. There would be a shortage of 40 units. B. There would be a surplus of 40 units. C. There would be a shortage of 20 units. D. There would be a surplus of 20 units.
The government tries to protect the competitive economic system by passing and enforcing
A. antitrust laws. B. building codes and zoning laws. C. price controls. D. tariff legislation.