Non-activists believe that the principal source of AD instability is
A) private investment spending.
B) private consumption spending.
C) erratic government policy.
D) All of the above.
C
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A financial crisis occurs when an increase in asymmetric information from a disruption in the financial system
A) causes severe adverse selection and moral hazard problems that make financial markets incapable of channeling funds efficiently. B) allows for a more efficient use of funds. C) increases economic activity. D) reduces uncertainty in the economy and increases market efficiency.
Suppose the world economy is divided into two halves. In Region A, all economies experience a decrease in desired saving, while desired saving is unchanged in Region B
If there is open trade and perfect capital mobility across the two regions, which of the following is true? A) Actual saving in Region B has increased. B) Actual investment in Region A has increased. C) Region A's imports from Region B have decreased. D) all of the above E) none of the above
Rationing occurs for goods
A) that have a positive price. B) that have a zero price. C) that have a negative price. D) that are not manufactured.
If the marginal propensity to save (MPS) is 0.50, the value of the spending multiplier is:
a. 1. b. 2. c. 4. d. 9.