In the New Keynesian model, the stabilization effects of fiscal and monetary policy are different because
A) the effects on the composition of output are different.
B) monetary policy does not work in a liquidity trap, but fiscal policy does.
C) monetary policy affects spending on goods indirectly; fiscal policy affects spending directly.
D) all of the above.
D
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A firm that shuts down and produces no output incurs a loss equal to its
A) total fixed costs. B) total variable costs. C) marginal costs. D) marginal revenue.
Suppose that Hannah spends $3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at $0.60; total utility of the five biscuits is valued at $4.20 . Given this information, what do we know about consumer surplus?
a. It is impossible to determine consumer surplus without knowing the marginal utility of the first four biscuits. b. It is impossible to determine consumer surplus without knowing the price per biscuit. c. It is impossible to determine consumer surplus without knowing the price Hannah was willing to pay for the first five biscuits. d. Consumer surplus is equal to $2.40. e. Consumer surplus is equal to $1.20.
A decrease in demand is represented by a
a. movement downward and to the right along a demand curve. b. movement upward and to the left along a demand curve. c. rightward shift of a demand curve. d. leftward shift of a demand curve.
Fiscal policy and monetary policy are economic stabilization policies designed to
A. prolong recessions. B. prolong inflation. C. stabilize prices. D. decrease employment.