For each of the following scenarios, state the short-run effect on the AD curve
a. The price level decreases.
b. The target inflation rate increases.
c. The U.S. dollar falls in value relative to other currencies.
d. Government spending increases.
e. The Fed becomes more tolerant of deviations from the target inflation rate.
a. A price level decrease will cause a movement down the AD curve.
b. An increase in the target inflation rate will shift the AD curve to the right.
c. A decrease in the value of the dollar relative to other currencies will increase net exports and shift the AD curve to the right.
d. An increase in government purchases will shift the AD curve to the right.
e. An increase in central bank tolerance of deviations from the target inflation rate will shift the AD curve to the left.
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Grant has $200 to spend each month on restaurant meals and jazz performances at his
neighborhood jazz club. The price of a typical restaurant meal is $20 and the price of a jazz performance ticket is $10. Grant is maximizing his utility by consuming 6 restaurant meals and attending 8 jazz performances. Suppose Grant still has $200 to spend, but the price of restaurant meal rises to $25, while the price of jazz performance ticket drops to $8. Can it be determined if Grant is better off or worse off than he was before the price change? Use a budget constraint/indifference curve graph to illustrate your answer.
Consumer surplus is created when
a. a person trades away a good that yields diminishing marginal utility b. a person's total utility increases when consuming an additional unit of a good c. a good is purchased at a price that is less than the price the consumer would have been willing to pay d. the total utility of a good is greater than its marginal utility e. many consumers want to buy a good and the price goes up
Refer to the graph below, showing the long-run supply and demand curves in a purely competitive market. The curves suggest that in this industry, the dollars' worth of other products that have to be sacrificed in order to produce each unit of the output of this industry is:
A. Constant
B. Increasing
C. Decreasing
D. Not indicated in the graph
According to Kantian theory on ethics:
A. an act is ethical if and only if it promotes the individual's long-term interests. B. good deeds often result in bad outcomes. C. an act is ethical if it produces the greatest possible balance of good over bad for everyone affected by it. D. only good deeds matter.