Answer the following statements true (T) or false (F)
1. The aggregate demand curve shows that when the price level rises, the quantity of real output demanded decreases.
2. An increase in the price level reduces the real value of financial assets with fixed money values and, as a result, the holders of these assets decrease their spending.
3. The real-balance and interest-rate effects help explain why aggregate demand might shift to the right or to the left.
4. An increase in real interest rates will increase investment and aggregate demand.
5. When the stock market crashed in 2008, the so-called reverse wealth effect caused consumer spending to decrease.
1. TRUE
2. TRUE
3. FALSE
4. FALSE
5. TRUE
You might also like to view...
Larger volume is more likely to be associated with lower prices if the larger volume results from
A) increased demand. B) inelastic demand. C) increased supply. D) elastic supply. E) inelastic supply.
Assume the firms in an oligopoly produce a differentiated product and are initially colluding
If each firm begins to cheat (to increase sales) by underpricing the other firms, as the amount of cheating increases, the resulting industry price and output will approach the outcome for: A) perfect competition. B) monopolistic competition. C) noncooperative monopoly. D) noncooperative oligopoly.
Phil and Kelly have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500 . Their total consumer surplus amounted to:
a. $750 b. $5,000. c. $1,500. d. $3,500.
In the long run, imports are paid for by
A) investment. B) exports. C) dollars. D) gold or other universally accepted monies.