The aggregate demand curve shifts when there are changes in:
A. exogenous spending and the Fed's reaction function.
B. potential output and exogenous spending.
C. exogenous spending and inflation inertia.
D. inflation inertia and aggregate supply shocks.
Answer: A
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The profit-maximizing manager of Big Farms wants to purchase a large piece of farm equipment. The manager has two financing options from two different banks. Big Bank will allow the manager to make five equal payments of $22,000 at the end of each of the next five years. Best Bank will allow the manager to make a payment of $10,000 at the end of the next four years and then make a balloon payment
of $72,000 at the end of the fifth year. If the interest rate is 4 percent, which of the following statements is true? A) The manager of Big Farms should select Big Bank's offer because the total repayment is less than the total repayment at Best Bank. B) The manager of Big Farms should select Big Bank's offer as the present value of the payment plan is $97,939.60, which is lower than the payment plan offered by Best Bank. C) The manager of Big Farms should select Best Bank's offer as the present value of the payment plan is $95,477.75, which is lower than the payment plan offered by Big Bank. D) The present value of the two payment plans is exactly the same, so the manager of Big Farms is indifferent between the two payment plans.
My income rose and the price of good Y rose also. That means that my demand curve for good X shifted right.
A. This statement will always be true if good Y is a substitute for good X. B. This statement will always be true if good Y is a substitute for X and X is a normal good. C. This statement will always be true if good X is a normal good. D. This statement is always true.
If the misery index is 12 and the inflation rate is 4 percent, we can conclude
A. The AD curve must be shifting to the right. B. The inflation rate will quickly rise by 8 percent. C. Monetary policy is not succeeding at keeping inflation low. D. The unemployment rate must be 8 percent.
In economics, the term "marginal" refers to
A) total. B) a change in the total. C) average change. D) inverse.