Other things equal, along the aggregate demand curve, a higher price level is associated with
A) an increase in the quantity of real GDP demanded.
B) a decrease in the quantity of real GDP demanded.
C) a decrease in the quantity of nominal GDP demanded.
D) higher income levels.
B
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Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140 Assume that the MPC is 0.8 and the reserve requirement is 0.1. If the Federal Reserve needs to increase aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 7%, then the Federal Reserve should ________ bonds on the open market equal to ________.
A. sell, $2 billion B. sell, $4 billion C. buy, $4 billion D. buy, $2 billion
Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03
These elasticities mean that beer and spirits are ________, and spirits and wine are ________. A) complements; substitutes B) substitutes; luxuries C) complements; luxuries D) normal goods; luxuries
The "lemons problem" in the used car market arises from
A) the difficulty U.S. producers have in making reliable cars. B) the difficulty buyers have in distinguishing good cars from lemons. C) the tendency of buyers of used cars to pay for them with bad checks. D) the reluctance of many car dealers to handle used cars.
Lobbying can shape regulations through:
A. collusion. B. objective cost benefit analysis. C. forced action. D. rent-seeking behavior.