An unexpected increase in total spending will cause an increase in GDP:
A. if prices are sticky.
B. if prices are fully flexible.
C. regardless of whether prices are sticky or fully flexible.
D. only if prices are stuck in the long term.
A. if prices are sticky.
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The consumption function shifted upward from 1960 to 2013 because as economic growth brought ________ expected future income and ________ wealth, people chose to ________ their consumption expenditure from a given level of income
A) higher; greater; decrease B) lower; greater; increase C) higher; less; increase D) higher; greater; increase E) higher; less; decrease
Perfect competition implies that
A) there are many firms in the market. B) all firms are price takers. C) all firms are producing the same identical product. D) All of the above answers are correct.
Refer to the above figure. Suppose that the economy initially is operating along AD1
If the government seeks to close the recessionary gap by raising government spending without any change in taxation, which moves the aggregate demand curve from AD1 to AD2, then to AD3. Which of the following scenarios is TRUE? A) Interest rates fall and investment rises. B) Both interest rates and investment fall. C) Both interest rates and investment rise. D) Interest rates rise and investment falls.
The problem of special interests financing congressional campaigns and presidential elections is associated with
a. government failure b. public choice theory c. market failure d. negative externalities e. government subsidies