Suppose that the central bank increases interest rates in an economy. How would this affect aggregate demand and inflation?

A) Aggregate demand would fall and inflation would rise.
B) Aggregate demand would fall and inflation would fall.
C) Aggregate demand would rise and inflation would rise.
D) Aggregate demand would rise and inflation would fall.


Answer: B) Aggregate demand would fall and inflation would fall.

Economics

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Assume that a purely competitive firm uses two resources—labor (L) and capital (C)—to produce a product. In which situation would the firm be maximizing profit?




A. Choice A

B. Choice B

C. Choice C

D. Choice D

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In the figure above, if the minimum wage is $4 per hour, then

A) the quantity of labor supplied is less than the quantity of labor demanded. B) the quantity of labor supplied is 4 million hours and the quantity of labor demanded is 2 million hours. C) unemployment is 1 million hours. D) the quantity of labor supplied is 3 million hours and the quantity of labor demanded is 3 million hours.

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Nearly two out of three Americans feel that we are spending too little on welfare

Indicate whether the statement is true or false

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