Figure 9-4
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In Figure 9-4, which expenditure level will cause an inflationary gap?
A. 1
B. 2
C. 3
D. There will be no inflationary gap.
Answer: A
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Which of the following is a problem associated with extreme levels of poverty?
A) High life expectancy B) High infant mortality C) High literacy D) Low fertility
The usefulness of money in commercial societies comes from the fact that
A) money is backed by gold. B) most people will change their behavior at least a little in response to money incentives. C) most people will do anything at all for money. D) most people would rather spend money than save it. E) the quantity of money can easily be expanded or contracted.
Why do wage increases along with increases of other input prices impact the short-run aggregate supply but not the long-run aggregate supply, unless they reflect permanent reductions in the supply of those inputs?
When the price of one fruit increases, consumers buy more of another fruit. This situation is an illustration of:
a. The rationing function of prices b. The income effect c. The substitution effect d. Diminishing marginal utility