Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then:
A. aggregate demand will decrease.
B. aggregate demand will increase.
C. long-run aggregate supply will increase.
D. long-run aggregate supply will decrease.
Answer: B
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Which of the following is true of marginal revenue product (MRP) and marginal product (MP)?
a. MRP = MP ? price, whether the firm is a price searcher or not. b. MRP = MP ? price only if the firm is a price searcher. c. MRP = MP ? price only if the firm sells in a perfectly competitive market. d. MRP = MP ? marginal cost only if the firm is a price searcher. e. MRP = MP/price only if the firm is a price taker.
According to Friedman, people behave differently with respect to the different kinds of incomes they earn. For example, the MPC in 2002 is associated with their _________ income earned in 2000 . The difference between the income earned in 2001, and that income in 2002 is called ___________ income
a. relative; absolute b. absolute; relative c. permanent; transitory d. transitory; permanent e. transitory; transitory
On a graph we draw a consumer's budget constraint, measuring the number of pineapples on the horizontal axis and the number of pencils on the vertical axis. If the slope of the budget constraint is -6, then
a. a pineapple costs six times as much as a pencil. b. the opportunity cost of a pineapple is 6 pencils. c. the opportunity cost of a pencil is one-sixth of a pineapple. d. All of the above are correct.
A decrease in marginal tax rates will ________ after-tax profits and ________ more investment.
A. decrease; discourage B. increase; discourage C. decrease; encourage D. increase; encourage