If the Fed orders an expansionary monetary policy, describe what will happen to the following variables relative to what would have happened without the policy:
a. The money supply
b. Interest rates
c. Investment
d. Consumption
e. Net Exports
f. The aggregate demand curve
g. Real GDP
h. The price level
a. The money supply increases
b. Interest rates fall
c. Investment increases
d. Consumption increases
e. Net exports increase
f. The aggregate demand curve shifts to the right
g. Real GDP rises
h. The price level rises
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
The principle that "More is better" results in indifference curves
A) sloping down. B) not intersecting. C) reflecting greater preferences the further they are from the origin. D) All of the above.
The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is
a. an explicit cost. b. an accounting cost c. an implicit cost. d. forgone accounting profit.
Voluntary trade promotes economic progress because it
a. moves goods, services and resources from people who value them more to individuals who value them less. a. moves goods, services and resources from people who value them more to individuals who value them less. b. encourages individuals to become self-sufficient. c. makes larger outputs possible as a result of specialization. d. benefits buyers at the expense of sellers.