The relationship between government spending and the price level explains the:
A. upward-sloping aggregate demand curve.
B. downward-sloping aggregate demand curve.
C. perfect elasticity of the aggregate demand curve.
D. None of these is true.
D. None of these is true.
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Which of the following statements CORRECTLY describes the policy stance of a macroeconomist?
A) A monetarist believes that the quantity of money should be constantly changed in order to offset changes in aggregate demand. B) A new classical macroeconomist believes that fiscal and monetary policy are required to maintain full employment. C) A Keynesian believes that if taxes are always kept low and the quantity of money is kept on a steady growth path, no policy actions will be needed to maintain full employment. D) A classical macroeconomist believes that maintaining consistently low taxes will allow the economy to expand at an appropriate and rapid pace.
If a central bank does not want to allow the domestic currency to depreciate, it will ________ international reserves by purchasing its currency, thereby ________ the monetary base and increasing the risk of higher unemployment
A) lose; decreasing B) lose; increasing C) acquire; decreasing D) acquire; increasing
What happens if price falls below the market clearing price?
A) Demand shifts out. B) Supply shifts in. C) Quantity demanded decreases, quantity supplied increases, and price falls. D) Quantity demanded increases, quantity supplied decreases, and price rises.
One major assumption of economics is that people
A. always pursue the interests of others. B. behave randomly without any predictable pattern. C. act as if they systematically pursue self-interest. D. are sometimes rational and sometimes irrational.