A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward
a. True
b. False
Indicate whether the statement is true or false
True
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Government expenditures on goods and services include
i. the New York City Library's purchase of new books. ii. Washington D.C.'s purchase of gas for its city buses. iii. California's payment of wages to prison guards. A) i and ii B) i and iii C) i, ii and iii D) i only E) ii and iii
Refer to Figure 21-4. Which of the following is consistent with the graph depicted?
A) an increase in household income B) an increase in tax revenues collected by the government C) an increase in transfer payments to households D) an increase in the proportion of income after net taxes used for consumption
If the price of a good rises by 10% and the quantity purchased falls by 15%, then demand for the good is ________ and total spending on the good will ________
A) elastic; increase B) inelastic; increase C) elastic; decrease D) me and so inelastic; decrease
The main reason why banks are the leading source of external finance for businesses is
A) the interest rates on bank loans are usually lower than interest rates on corporate bonds. B) banks have an information-cost advantage in reducing adverse selection problems. C) interest paid on bank loans is deductible against the corporate income tax, whereas interest paid on corporate bonds is not. D) government regulators encourage small businesses to obtain funding from banks.