Refer to the above figure. Suppose the relevant aggregate demand curve is AD2. If the government wants to use fiscal policy to close the existing gap, it should
A. decrease taxes.
B. increase taxes.
C. increase the money supply.
D. increase government spending.
Answer: B
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The international agreement signed in 1947 to promote world trade by reducing tariffs and other barriers to international trade was called
A) GATT. B) NAFTA. C) WTO. D) Bretton-Woods agreement.
The Weber-Fechner law is the relationship according to which the perceived change in any stimulus:
A. depends upon the ease with which it is possible to summon similar changes from memory. B. varies depending upon whether the change triggers loss aversion. C. varies according to the size of the change measured as a proportion of the original stimulus. D. depends upon an initial approximation, which is then updated in accordance with additional information.
Managers of franchises ________ face the problem of free -riding with their system-wide advertising because franchises ________ contractually bound to pay for the advertising.
A) do; are not B) do; are C) do not; are not D) do not; are
The short-run average variable cost curve
a. is always downward-sloping b. starts at the origin and always slopes upward c. starts above the origin and always slopes upward d. is a horizontal line intersecting the vertical axis e. slopes downward at low rates of output, then slopes upward at higher rates of output