German luxury car exports were hurt in 2009 as a result of the recession. How did this decrease in exports affect Germany's aggregate demand curve?
A) The aggregate demand curve shifted to the right.
B) The aggregate demand curve did not shift, but there was a movement up the aggregate demand curve.
C) The aggregate demand curve did not shift, but there was a movement down the aggregate demand curve.
D) The aggregate demand shifted to the left.
Answer: D
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Suppose that real GDP is initially $14 trillion and the government attempts to increase real GDP to $15 trillion. The marginal propensity to consume is 0.8, and every $1.00 increase in real government spending crowds out $0
50 in real planned investment expenditures. Which increase in government spending below could yield the desired level of real GDP? A) $200 billion B) $125 billion C) $100 billion D) $400 billion
What is deadweight loss and under what conditions does it occur?
What will be an ideal response?
Other things equal, an increase in the tax on dividends is likely to result in all of the following EXCEPT:
A) higher expected return on bonds relative to stocks B) increased demand for bonds C) lower interest rates D) higher interest rates