Figure 10-7
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Which of the diagrams in Figure 10-7 represents a decrease in consumer spending combined with a positive supply shock?
A. (A) and (B)
B. (C) and (D)
C. (A) and (C)
D. (B) and (D)
Answer: A
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If marginal cost is increasing, average variable cost must also be increasing.
Answer the following statement true (T) or false (F)
Which of the following will NOT cause market supply to increase?
A. an increase in the costs of resources used to produce the product B. a decrease in labor costs C. a change in technology which allows a larger level of production at every price D. an increase in the number of firms supplying the product in the market
If you had fixed costs of $100,000 and variable costs of $10,000, in the long run you would stay in business if total revenue were equal to, or greater than
A. $0. B. $10,000. C. $100,000. D. $110,000.
Assume that the MPC is 0.75. If government spending increases by $400, equilibrium output ________; and if taxes increase by $400, equilibrium output ________.
A. increases by $1,600; decreases by $1,600 B. increases by $1,200; decreases by $1,600 C. increases by $1,600; decreases by $1,200 D. increases by $400; decreases by $400