How does the aggregate-demand curve shift when increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending?
a. The curve shifts to the right.
b. The curve shifts to the left.
c. The curve does not shift at all.
d. The curve first shifts to the right and then shifts to the left.
Answer: b. The curve shifts to the left.
You might also like to view...
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
a. maximizes both the total revenue for firms and the quantity supplied of the product. b. maximizes the combined welfare of buyers and sellers. c. minimizes costs and maximizes output. d. minimizes the level of welfare payments.
Recall the Application about the time involved in including cell phones in the calculation of the Consumer Price Index (CPI) to answer the following question(s).According to the Application, the telecommunications component of the Consumer Price Index (CPI) was biased:
A. upward by 0.8 to 1.9 percent. B. upward by 1.8 to 2.9 percent. C. downward by 0.8 to 1.9 percent. D. downward by 1.8 to 2.9 percent.
The economy moves up a stationary aggregate demand curve when the Fed:
A. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function. B. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function. C. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function. D. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
Which of the following describes the asymmetry Mancur Olson observed in the incentives to support and oppose trade policy?
A) The benefits of those seeking protection outweigh the costs imposed by the protection. B) The benefits of protection are spread out over a large number of firms and industries, but the costs are concentrated on consumers. C) The benefits of policy are concentrated, and the costs are spread out over a large number of participants. D) The costs of protection are concentrated on a few firms, and the benefits of protection are spread out over a large number of consumers.