A change in the aggregate price level moves the economy along a given aggregate supply curve
a. True
b. False
Indicate whether the statement is true or false
True
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When consumption expenditure is ________ disposable income, saving is ________
A) greater than; positive B) equal to; positive C) less than; positive D) less than; negative E) equal to; negative
Gasoline and motel rooms are complements for many consumers. When the price of gasoline declines, consumers take longer vacations and rent more motel rooms. Therefore, the cross price elasticity between gasoline and motel rooms is
A. positive. B. negative. C. less than one because neither is a luxury. D. more than one because both are luxuries.
If no fiscal policy changes are made, suppose the current aggregate demand curve will increase horizontally by $1,000 billion and cause inflation. If the marginal propensity to consume (MPC) is 0.80, federal policymakers could follow Keynesian economics and restrain inflation by decreasing:
a. government spending by $200 billion. b. taxes by $100 billion. c. taxes by $1,000 billion. d. government spending by $1,000 billion.
Which of the following can be categorized as derived demand?
a. A decline in the demand for building products following a drop in housing demand. b. An increase in demand for gasoline following a fall in the price of petroleum products. c. An increase in the demand for woolens in winter. d. A decline in the demand for labor on account of outrageous demands of trade unions.