Why do price levels increase when government adopts fiscal or monetary policy to correct the economy when it faces a recession and high unemployment?
What will be an ideal response?
Recession and unemployment are often caused by insufficient aggregate demand. Policy makers can use monetary and fiscal policy tools to stimulate aggregate demand during recession. The aggregate demand curve will shift to right leading to an increase in general price levels.
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Provide a concise statement about the relationship between multinational corporations and:
(a) domestic employment, (b) foreign exchange, (c) taxes, (d) investment, (e) consumption, (f) industrialization, (g) inequality, and (h) technology.
A business owner makes 50 items a day. She spends 8 hours in producing those items. If hired elsewhere she could have earned $10 an hour. The item sells for $10 each. Production occurs seven days a week. If the explicit costs total $10,000 a month the economic profit for the month equals:
a. $2,600 b. $2,240 c. $11,760 d. $5,000
Tax policy can affect ____________________ and investment spending, resulting in a shift in the AD curve.
a. consumption b. savings c. production d. government
The benefit of a subsidy will go primarily to buyers when the
a. demand for the product is highly inelastic and supply is relatively elastic. b. demand for the product is highly elastic and the supply is relatively inelastic. c. subsidy is legally (statutorily) granted to the seller of the product. d. subsidy is legally (statutorily) granted to the buyer of the product.