A decrease in spending on new homes will, other things being equal:
A. increase aggregate demand.
B. decrease aggregate demand.
C. increase aggregate supply.
D. decrease aggregate supply.
Answer: B
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The "crowding out" effect refers to the:
A. increase in domestic investment by foreigners, leaving little investment choice for domestic investors. B. reduction in the interest rate caused by governments running a deficit. C. reduction in domestic investment caused by governments running a deficit. D. irrational exuberance of the market reducing the number of rational investments available.
The use of money allows trade to be roundabout
a. True b. False Indicate whether the statement is true or false
Your income rises from $1,000 a year to $10,000 and your purchases of beer increase from 10 to 20. What number below most closely approximates your income elasticity over this range?
A. 2.5 B. 4 C. 1 D. 0.4
Traditionally, a recession defined by declining Real GDP lasts over a period of at least
A. two consecutive calendar years. B. two consecutive calendar quarters. C. one calendar year. D. one calendar quarter.