The demand curve facing a perfectly competitive firm is
a. vertical at the equilibrium
b. perfectly inelastic
c. downward sloping
d. horizontal at the market price
d
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According to the textbook, L. Frank Baum, the author of The Wonderful Wizard of Oz, blamed ____________________ for the economic depression of 1893 and the related hardships faced by farmers and workers
A) the gold standard B) the silver standard C) a massive tornado D) high taxes
Classical economists concluded that
A. Spending leakages exceed spending injections. B. Investment will decrease in response to increased savings. C. Interest rates adjust such that business investment and consumer saving may equal. D. The economy might experience persistent macro instability.
Refer to the above figure. Suppose that the economy initially is operating along AD1. If the government seeks to close the recessionary gap by raising government spending without any change in taxation, which moves the aggregate demand curve from AD1 to AD2, then to AD3. Which of the following scenarios is TRUE?
A. Interest rates rise and investment falls. B. Both interest rates and investment rise. C. Interest rates fall and investment rises. D. Both interest rates and investment fall.
Country B is a closed economy with no government and a fixed aggregate price level. There are only two sources of aggregate demand, consumer spending and investment spending. In country B, we have that aggregate disposable income Yd, equals GDP. b. Suppose you are told that the aggregate consumption function is C=500+0.5Yd, and the planned investment, IPlanned, is 100. What is the MPC? What is the slope and y-intercept of the AEPlanned curve ?
What will be an ideal response?