If the Fed purchases U.S. government securities, gross domestic product:
a. increases because the resulting increase in the interest rate leads to a decrease in investment.
b. increases because the resulting decrease in the interest rate leads to an increase in investment.
c. decreases because the resulting increase in the interest rate leads to a decrease in investment.
d. decreases because the resulting increase in the interest rate leads to an increase in investment.
e. decreases because the resulting decrease in the interest rate leads to an increase in investment.
b
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Potential GDP in the United States
A) declines over time. B) changes over a given business cycle. C) does not change over time. D) grows as the economy grows.
If the aggregate supply curve is horizontal, an increase in aggregate demand will
A) increase both real and nominal GDP by the full multiplier effect. B) increase nominal GDP but not real GDP. C) increase the price level but not real GDP. D) increase real GDP by less than the full multiplier effect because of rising prices.
If Bart has budget constraint A in the graph shown, what would cause his budget constraint to shift to B?
This graph shows three different budget constraints: A, B, and C.
A. Bart's income has decreased.
B. The price of soda has increased.
C. The price of soda has decreased.
D. The price of milk has increased.
Refer to the graph shown, which depicts a perfectly competitive firm. If the price of the product is $8 and the firm maximizes profit:
A. output will be 100 units per day. B. average cost of the product will be at the minimum possible level. C. the firm will earn economic profits of more than $330 per day. D. the industry will be in long-run equilibrium.