According to the Keynesian view, government spending will have its greatest impact during a severe recession because
a. automatic stabilizers will shift the budget toward a surplus during a severe recession.
b. underemployed resources will be widespread and the crowding out of private spending will be minimal.
c. budget deficits will reduce interest rates and thereby stimulate private investment.
d. increases in the government's outstanding debt will lead to lower future taxes.
B
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Seller A, has an upward-sloping supply curve, and is willing to supply 400 units of a commodity at a price of $5 per unit. Seller A is now willing to supply 500 units at a price of $5 per unit. Evidently, seller A has experienced a(n):
a. increase in supply. b. decrease in supply. c. increase in quantity supplied. d. decrease in the quantity supplied. e. decrease in demand.
Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the accompanying graph. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph.
At a price of $15 (the price at which the two demand curves intersect), the price elasticity of demand for the new drug is ________ the price elasticity of demand for the over-the-counter pain reliever.
A. greater than B. the same as C. the reciprocal of D. less than
Which of the following is an example of lower production costs brought about by the use of technology?
a) the delivery costs of gasoline to the consumer by diesel trucks b) the use of e-mail to replace slower surface mail c) the making of breads and pastries in local shops rather than large bakeries d) the importing of fresh vegetables from South America rather than using canned vegetables
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.