The reason a shock to one sector can spread to the whole economy is that
a. a decrease in production in one sector leads to an overall decrease in spending
b. firms will need to help bail out other firms that are having troubles
c. an increase in production in one sector will lead to an overall decrease in spending
d. most shocks are not sector-specific but economy-wide
e. workers laid off in the one sector will purchase more goods in another sector
A
You might also like to view...
________ occurs when the direction of cause and effect is mixed up in a study
A) Adverse causality B) Omitted variable bias C) Reverse causality D) Limited information bias
Refer to Figure 23-3. Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP?
A) $9 million B) $10 million C) $90 million D) $100 million
Which of the following is an example of unplanned investment spending?
a. A fall in the sales of Brax Inc.'s leather jackets that leads to an increase in its stock in the warehouses b. An increase in the demand for Martha's blueberry cheesecakes that increases her demand for cheese c. A fall in the demand for Oliver's muffins that forces him to give away his muffins for free d. A seafood restaurant that keeps a few steaks in its stock every week
ABC Light Bulbs has a monopoly on a new style of LED lighting. Right now, they sell 5 million bulbs at a unit price of $10. If they lower their price to $8, they will sell 7 million units. What is the price effect in this scenario?
a. ABC is unable to influence the price of its products if output exceeds 7 million bulbs. b. ABC earns an additional $18 for every bulb it sells over 5 million. c. ABC loses $10 million in revenue by selling at a lower price to its original customers. d. ABC gains $6 million in revenue by selling more bulbs to new customers.