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Question
Refer to the above figure. Suppose the relevant aggregate demand curve is AD2. If the government wants to use discretionary fiscal policy to close the existing gap, it should
A) decrease taxes.
B) increase taxes.
C) increase the money supply.
D) decrease government spending.
Answer
This answer is hidden. It contains 1 characters.
Related questions
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The purpose of an effluent fee imposed on a firm isA) to increase output of its product by increasing the resources allocated to production.B) to increase output of its product by reducing the resources allocated to production. C) to reduce output by increasing production costs thereby reducing resources used. D) none of the above
Q:
Refer to the above figure. At a price of $2 per gallon, there isA) a surplus of 20,000 gallons per month. B) a shortage of 40,000 gallons per month.C) a shortage of 80,000 gallons per month. D) a shortage of 60,000 gallons per month.
Q:
How would you illustrate economic growth with the production possibilities curve? Explain.
Q:
What happens to the production possibilities curve if technology enables an economy to produce more of every good? Is there any tradeoff involved in this change?
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Shelleyʹs grandmother gave her a sweater for her birthday, but Shelley wanted a DVD. This implies thatA) Shelleyʹs grandmother is not acting out of self-interest because she knows that Shelley really wanted a DVD.B) Shelleyʹs grandmother is acting out of self-interest because she wanted to give Shelley something useful.C) it is in Shelleyʹs self-interest to refuse to wear the sweater. D) Shelley should exchange the sweater for a DVD.
Q:
Refer to the above figure. Other things being equal, when the government imposes a price floor at P2, then we would expectA) the quantity demanded is Q 2.B) a surplus will occur.C) price to decline until an equilibrium is achieved at P0.D) consumers to bid against each other for goods and force the price even higher.
Q:
Maximum Feasible Hourly Production Rate ChenHollyUnits of Good X5040Units of Good Y25100Suppose that the opportunity cost of producing goods differs between two nations. We can correctly state thatA) the two nations should not specialize in the production of goods.B) specialization can lead to an increase in the production of all goods.C) specialization can lead to an increase in the consumption of all goods.D) neither country has a comparative advantage in the production of any good.
Q:
A production possibilities curve will shift inwardA) when the unemployment rate increases. B) when production is inefficient.C) when resources are expanding.D) when a war destroys the capital goods of a country.
Q:
Which of the following is NOT an example of investment in human capital?
A) A medical studentʹs internship
B) The purchase of a personal computer for playing games
C) A mechanic attends a training workshop on a new type of engine
D) Johnny learns how to read
Q:
Incentives areA) potential rewards available if a particular activity is undertaken. B) ineffective as a device to get people to behave in a certain fashion. C) inappropriate ways to obtain a certain kind of behavior.D) useless when people behave rationally.
Q:
An increase in the market clearing exchange value of the home nationʹs currency in terms of the currency of another nation is a home currencyA) appreciation. B) depreciation. C) devaluation. D) revaluation.
Q:
Economic growth can be pictured in a production possibilities curve diagram byA) shifting the production possibilities curve in. B) shifting the production possibilities curve out.C) making the production possibilities curve straighter.D) moving from a point inside the production possibilities curve to a point on the curve.
Q:
The exchange rate for a foreign currency that is determined by supply and demand isA) a fixed exchange rate. B) a controlled exchange rate. C) a constrained exchange rate. D) a flexible exchange rate.
Q:
Markets tend to underallocate resources to the production of a good whenA) there are negative externalities. B) there are positive externalities. C) there are public goods produced. D) equilibrium occurs.
Q:
Markets tend to overallocate resources to the production of a good whenA) there are negative externalities. B) there are positive externalities. C) there are public goods produced. D) equilibrium occurs.
Q:
The rationality assumption says thatA) people do not intentionally make decisions that would leave them worse off. B) people never make decisions that would leave them worse off.C) people do not respond to incentives since incentives require scarce resources. D) all economic analysis must be normative.
Q:
Assume the following exchange rates for today: $1 =140 yen and 1 Danish krone = $0.10. We can concludeA) 1 yen = 280 kr. B) 1 yen = 14 kr. C) 1 kr. = 28 yen D) 1 kr. = 14 yen
Q:
The law that created the high level of tariffs in United States in the 1930s isA) the GATT Act.B) the World Trade Act.C) the Smoot-Hawley Act. D) the Tariffs Agreement Act.
Q:
Which of the following statements is FALSE?
A) The rationing function of prices is not allowed to freely operate when the government imposes price controls.
B) Price controls may take the form of price ceilings or price floors.
C) Price ceilings below the equilibrium price can cause black markets to develop.
D) Rent controls are examples of price floors.
Q:
The discovery of new natural resources will causeA) the economy to move closer to the production possibilities curve. B) the production possibilities curve to shift up and to the right.C) an upward movement along the curve. D) the curve to shift back and to the left.
Q:
A paint firm has just announced that it will be building a new plant in a small town that is currently experiencing a high level of unemployment. The new plant will create 500 new jobs in the area and will occupy unused land at the edge of town. The plant will also dump some harmful chemicals into the townʹs river. From an economic standpoint this dumping of chemicalsA) is unimportant since the firm is reducing the unemployment in the region. B) creates a negative externality.C) is the production of a public good. D) creates a positive externality.
Q:
Market clearing priceA) refers to a movement along the demand curve. B) refers to a supply curve.C) exists at a the point at which quantity demanded equals quantity supplied. D) refers to a surplus.
Q:
Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will causeA) an increase in the demand for coffee. B) a decrease in the demand for coffee.C) a leftward shift of the demand curve for tea. D) a leftward shift in the demand for coffee.
Q:
When a tariff is imposed, the supply curve for the imported goodA) shifts downward and to the right.B) shifts upward and to the left. C) does not change. D) becomes perfectly inelastic.
Q:
In order to be effective, a price floorA) must be set below equilibrium price. B) must be set above equilibrium price. C) must be set at equilibrium price.D) must be a zero price.
Q:
Discuss the relationship between world trade and world Gross Domestic Product (GDP) since the early 1950s.
Q:
Scarcity exists becauseA) the majority of people in the world are poor.B) people are too greedy and refuse to share what they have with others.C) human wants exceed what can be produced with the limited resources available. D) not enough new technology is being used to eliminate scarcity.
Q:
A movement along the production possibilities curve would imply thatA) the labor force has grown.B) productivity has increased.C) society has chosen a different set of outputs.D) productivity has declined because workers are demanding more leisure.
Q:
Goods X and Y are complementary goods. An increase in the price of good X has occurred. In the market for good Y this will lead toA) an increase in price and a decrease in quantity. B) an increase in price and an increase in quantity. C) a decrease in price and a decrease in quantity. D) a decrease in price and an increase in quantity.
Q:
The United Statesʹ balance of payments is likely to improve whenA) there is an increase in political instability in other countries.B) the inflation rate in the United States rises relative to other countries.C) the American government increases its spending on foreign aid. D) American people want to invest more in foreign countries.