In the aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a:
A. Decrease in government spending or an increase in taxes
B. Decrease in taxes or an increase in government spending
C. Decrease in interest rates or a decrease in taxes
D. Decrease in saving or an increase in government spending
A. Decrease in government spending or an increase in taxes
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When the price of an inferior good falls, the substitution effect leads to ________ in the quantity purchased and the income effect leads to ________ in the quantity purchased
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease
The real interest rate is calculated as the
a. expected rate of inflation divided by the nominal interest rate b. real GDP plus the expected rate of inflation c. nominal interest rate minus real GDP d. nominal interest rate minus the expected rate of inflation e. real GDP multiplied by the expected rate of inflation
For me to stop getting speeding tickets for a year, I gave five friends devices that measure my driving speed. If I drove over the speed limit by more than 5 miles per hour, I would have to pay them each $1,000. This would be an example of:
A. sunk costs. B. a precommitment strategy. C. opportunity costs. D. a deductive decision.
Related to the Economics in Practice on page 667: When a country lifts a quota, imports to that country generally ________ and the price of the affected product in that country generally ________.
A. increase; rises B. decrease; rises C. decrease; falls D. increase; falls