If competitive industry Y is incurring substantial losses, output will:
A. expand as resources move toward industry Y.
B. contract as resources move toward industry Y.
C. contract as resources move away from industry Y.
D. expand as resources move away from industry Y.
Answer: C
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Supply-side economic policies seek to
A) raise interest rates through contractionary monetary policy. B) increase federal government expenditures. C) increase consumption expenditures by increasing taxes. D) increase saving and investment using tax incentives.
Suppose the government attempts to stimulate the economy by increasing spending without increasing taxes. Which of the following statements is most likely to be accepted by someone who believes in crowding out?
A) The government's actions will have their intended effect. B) The government's actions will cause businesses to become more optimistic about the economy, and they will increase their output even more than the government had intended. C) The government's actions will raise interest rates, causing decreased investment and consumption, and the economy will not expand as much as the government had intended. D) This is a trick question, because the federal government is required by law to increase taxes by the same amount as it increases expenditures.
An economic expansion refers to an increase in the volume of goods and services produced.
Answer the following statement true (T) or false (F)
The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve.
Answer the following statement true (T) or false (F)