The size of the multiplier depends on
A. the level of autonomous consumption.
B. the marginal propensity to consume.
C. the level of autonomous investment.
D. the level of net exports.
Answer: B
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If there is an autonomous increase in spending (a rightward shift in the aggregate demand curve) and the Fed wishes to hold real income constant, then the Fed would:
A) decrease the money supply yielding a leftward shift in the aggregate demand curve. B) increase the money supply yielding a rightward shift in the aggregate demand curve. C) hold the money supply constant. D) none of the above.
One cost of a perfectly anticipated inflation is that it
A) transfers wealth from lenders to borrowers. B) transfers wealth from borrowers to lenders. C) increases menu costs. D) damages the role of prices as signals in the economy.
At a given rate of output, marginal cost equals the slope of the
a. long-run average cost curve b. short-run average total cost curve c. planning curve d. total cost curve e. average variable cost curve
Price controls may be thought of as
A. a restraint on the rationing function of prices. B. the freeing-up of free market forces. C. useful tools that promote production. D. necessary in market economies.