Figure 7.5
The consumer must decide how to split $20 between spending and saving.Refer to Figure 7.5. If the consumer uses cognition to offset present bias, he/she will maximize utility by ________ consumption and ________ saving.
A. increasing; increasing
B. increasing; decreasing
C. decreasing; increasing
D. decreasing; decreasing
Answer: C
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
In a competitive labor market, if the demand for labor increases, labor demand will shift to the:
A. right and wages will increase. B. left and wages will increase. C. right and wages will decrease. D. left and wages will decrease.
According to the Keynesian approach, a decrease in taxes
A) will decrease consumption, as the government will have to spend less. B) will not impact consumption, as most consumption is autonomous. C) will increase consumption exactly by the amount of the taxes. D) will increase consumption by an amount of less than the change in taxes.
A rise in the price level
A) raises the buying power of money. B) decreases the prices of exports. C) lowers the buying power of money. D) increases aggregate demand. E) makes the aggregate demand curve steeper.