A gamble in which you win D dollars if the coin comes up heads, but lose D dollars if the coin comes up tails has an expected value of
A. 0.
B. -1/2D.
C. 1/2D.
D. D.
Answer: A
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At a given price level, an increase in expected profits and business confidence will shift the aggregate demand curve:
A) rightward. B) leftward. C) both. D) none of the above.
The government wishes to reduce he price level by reducing real GDP by $400 billion. Assuming a tax multiplier of 4 and a government spending multiplier of 5, which of the following policy prescriptions would reduce the aggregate demand curve by $400 billion?
A. Decreasing government spending by $400 billion and increasing taxes by $100 billion. B. Decreasing government spending by $160 billion and decreasing taxes by $100 billion. C. Decreasing government spending by $40 billion and decreasing taxes by $40 billion. D. Decreasing government spending by $100 billion and keeping taxes the same.
When the expected inflation rate equals the actual inflation rate, the real interest rate was accurately estimated.
Answer the following statement true (T) or false (F)
If the demand curve is vertical a rightward shift of the supply curve will lead to
A) an increase in quantity supplied. B) an increase in quantity demanded. C) a decrease in quantity demanded. D) a decrease in price.