As the multiplier process works through time, the size of the multiplier effect becomes
a. larger.
b. smaller.
c. constant.
d. explosive.
b
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In the absence of the negative externality from each individual's contribution to road congestion, roads would not be congested (aside from congestion caused by accidents).
Answer the following statement true (T) or false (F)
The IS curve will shift down and to the left when
A) desired saving declines. B) government purchases increase. C) consumption increases. D) the expected future marginal product of capital declines.
If the Fed wishes to increase the interest rate, it can do so by
a. selling bonds b. buying bonds c. increasing the money supply d. setting a higher prime lending rate e. encouraging the public to buy bonds
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward