To illustrate the ultimate impact of the multiplier process when investment spending falls, we should
A. Shift the AD curve rightward once.
B. Shift the AD curve leftward and then shift the AS curve leftward.
C. Shift the AD curve leftward twice, once for the autonomous change and second for the multiplier effect.
D. Shift the AD curve leftward and then rightward.
Answer: C
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Because there are numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely
A) inelastic. B) unitary elastic. C) perfectly inelastic. D) elastic.
Which of the following statements concerning efficiency is correct?
A. If a toll road is heavily used so that traffic movement is slowed, the price per vehicle should be reduced since the road is generating more revenue. B. Economists advocate high prices for abundant resources and low prices for scarce resources. C. If a toll road is heavily used and traffic movement is difficult, the price per vehicle should be increased to shift some traffic to less-crowded roads. D. All of these options are desirable in promoting efficient use of scarce road space.
Which of the following does not affect the level of autonomous investment?
a. level of technology b. expectations of future growth c. rate of capacity utilization d. rate of interest e. level of income
Which of the following factors has the most quantitative importance on the oversimplified multiplier formula?
a. it ignores variable imports b. it ignores price-level changes c. it ignores income taxes d. All of these equally affect the oversimplified multiplier formula