The amount of money available in the economy:
A. is managed by the Federal Reserve.
B. varies depending on what is considered money.
C. is called the money supply.
D. All of these are true.
Answer: D
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Changes in government purchases affect aggregate demand only indirectly through consumption spending
Indicate whether the statement is true or false
One problem with the concept of utilitarianism is that
A) there is a cost to transferring income from the rich to the poor. B) there are increasing marginal costs. C) there are decreasing marginal benefits. D) markets cannot adjust to income redistribution.
Growth in aggregate demand will
A) cause the short-run Phillips curve to shift to the left. B) increase unemployment. C) move the economy to a higher point on the short-run Phillips curve. D) cause deflation.
Suppose the economy is initially operating at full employment. A reduction in the size of the budget deficit will cause which of the following in the long run?
A) a recessionary gap B) a reduction in real GDP C) an inflationary gap D) none of the above