Why is it desirable, if possible, to use policy to offset the effects of a decrease in aggregate demand?
Because a decrease in aggregate demand wastes resources. Unemployment rises and factories are idle.
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The isoquant mapping for perfect complements in production is
A. a straight line. B. concave. C. L-shaped. D. a ray passing through the origin.
A knowledge spillover occurs when firms:
a. restrict trade of inputs with each other. b. have wasteful expenditure. c. mimic the successful innovations of other firms. d. keep secrets from other firms.
The use of money is more efficient than barter because the introduction of money
A. reduces the need for economic specialization. B. reduces the need to exchange goods. C. reduces transaction costs. D. reduces the need for other stores of value.
In order to have an impact, a ________ must be set below the equilibrium price, and when this occurs, ________
A) price ceiling; consumer surplus increases B) price floor; consumer surplus decreases C) price ceiling; producer surplus decreases D) price support; total revenue increases E) price support; consumer surplus increases