If your income rises by 15 percent and, as a result, you buy more steak, then steak is a(n)
A) substitute.
B) normal good.
C) complement.
D) inferior good.
B
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When the money market is drawn with the value of money on the vertical axis, if the Federal Reserve sells bonds, then the money supply curve
a. shifts right, causing the price level to rise. b. shifts right, causing the price level to fall. c. shifts left, causing the price level to rise. d. shifts left, causing the price level to fall.
Real GDP measures the:
A. Market value of goods and services produced. B. Standard of living. C. Actual quantity of goods and services produced. D. Level of productivity.
Refer to the figure. Suppose that the economy is currently operating at the intersection of AS and AD 2 , and that the full-employment level of output is Y. If the government wants to move the level of real GDP back to Y and reduce demand-pull inflation, in the presence of a ratchet effect, it should:
A. reduce taxes or increase government spending.
B. enact a contractionary fiscal policy that will shift aggregate demand left to AD 1 .
C. enact a contractionary fiscal policy that will shift aggregate demand to the left, but not as far as AD 1 .
D. enact a contractionary fiscal policy that will shift aggregate demand to the left, farther left
than AD 1 .
Every country imposes tariffs on at least some imports
a. True b. False Indicate whether the statement is true or false