Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1.
B. P2 and Y1.
C. P2 and Y3.
D. P1 and Y2.
Answer: B
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In July, market analysts predict that the price of gold will rise in August. What happens in the gold market in July, holding everything else constant?
A) The demand curve shifts to the left. B) The supply curve shifts to the left. C) The quantity demanded and the quantity supplied increase. D) The supply curve shifts to the right.
Which of the following is false?
a. Expansionary fiscal policy will tend to cause net exports to fall b. The larger the crowding out effect, the smaller the actual effect of a given change in fiscal policy. c. The crowding out effect does not occur with a tax change. d. Starting from an initial recession equilibrium, expansionary fiscal policy could potentially increase employment to the full employment level.
Other things the same, a country that increases its savings rate will have
a. higher future capital and higher future real GDP per person. b. higher future capital but not higher future real GDP per person. c. higher future real GDP per person but not higher future capital. d. neither higher future capital nor higher future real GDP per person.
When insurance companies offer fair insurance,
A) risk-averse agents always purchase it. B) risk-neutral agents never purchase it. C) risk-loving agents always purchase it. D) nobody would purchase fair insurance.