There is an increase in government expenditures financed by taxes and its overall short-run effect on output is larger than the change in government spending. Which of the following is correct?
a. By themselves, both the change in output and the change in the interest rate increase desired investment.
b. By themselves, both the change in output and the change in the interest rate decrease desired investment.
c. By itself, the change in output increases desired investment spending and by itself the change in the interest rate decreases desired investment spending.
d. By itself, the change in output decreases desired investment spending and by itself the change in the interest rate increases desired investment spending.
c
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Which of the following statements is true?
A) A monopolist's product often has close substitutes. B) Firms under perfect competition produce differentiated products. C) Firms under monopolistic competition produce identical products. D) Firms under oligopoly produce either identical or differentiated products.
At a given output level, a temporary reduction in government purchases will
A) increase desired saving, causing the IS curve to shift down and to the left. B) increase desired saving, causing the IS curve to shift up and to the right. C) decrease desired saving, causing the IS curve to shift down and to the left. D) decrease desired saving, causing the IS curve to shift up and to the right.
The quality of a product
A) is usually unknown to the seller and the buyer. B) leads to adverse selection. C) creates noise in a market. D) is a hidden characteristic.
A price elasticity of demand of 2.3 implies
a. Demand is inelastic b. Demand is elastic c. Demand is unitary elastic d. Demand is perfectly elastic