D the dollar strengthened and the effect on aggregate supply was greater than the effect on aggregate demand. A An individual is willing to work more hours when the nominal wage rises by 5 percent and the overall price level rises by 4 percent. C import the goods in which it has a comparative advantage. D government trade disincentives regarding Colombian coffee make such trade possible. You plan to go to school this summer.
B the area beneath the market supply curve and above the market clearing price plus the area above the market demand curve and beneath the market clearing price. B promised benefit payouts are growing more rapidly than likely sources of revenues, indicating a future inability to keep the system operating. C people increase saving because they anticipate higher future taxes, resulting in a reduction in current consumption spending that offsets the increased government spending. C The demand for coffee would decrease. C when the production possibilities curve shifts outward to the right.
If the federal government borrows from the private sector to pay for increased budget deficits and interest rates increase, this will cause A a decrease in planned investment and planned consumption. C economists who conclude that money illusion is widespread. B when a country can produce all goods more quickly than any other country. B Jane purchases a new car for commuting to and from school. B is a relatively new idea that developed in the years during and after the Great Depression. Economists use natural experiments, statistical investigations, and economic experiments. B generates an equal increase in total spending because government spending makes up part of total spending.
Which of the following statements is true? A decrease in aggregate demand will cause A prices to fall according to classical economists, and unemployment to increase according to Keynes. In the circular flow of income, A. Suppose the economy is initially experiencing a recessionary gap. B for which the desired quantity is less than what nature provides at a zero price. B wages and prices are too flexible. C Corporations always evade taxes so that consumers ultimately bear the tax burdens as taxpayers. C aggregate supply to fall according to classical economists, and prices to fall according to Keynes.
A The change in taxes due divided by the change in taxable income B The change in taxable income divided by the change in taxes due C Total taxes due divided by total taxable income D Total taxable income divided by total taxes due 8. A major hurricane causes production problems in Gulf Coast region of the United States. Refer to the above figure. Compared to the Keynesian transmission mechanism, the monetarist transmission mechanism is a. D developed during World War I. . The Federal Reserve System is a.
D it reduces both nominal and real interest rates. C the consumer has been fooled by money illusion. Which of the following is considered investment? Banks create money by printing it. C one good is superior to another and drives it out of the market. Fiscal policy may end up being destabilizing to an economy because A there is never a long enough time lag.
C Johnny buys a new car for his wife as an anniversary gift. Which best describes the Keynesian transmission mechanism when the money supply rises? D it causes increases in unemployment. B fell; causing net exports to decrease and aggregate demand to fall. D import the goods in which it has an absolute advantage. If the supply and demand curves for a product both decrease, then equilibrium: A. A There would be a shortage of coffee.
The market wage for trained nurses is currently above the equilibrium wage. D The price system allows for economic efficiency. B Since the mid-1940s, expenditures on income security and health programs have increased considerably as a percentage of total federal government spending. C Engage in contractionary fiscal policy by reducing government spending. D the C + I + G + X line will shift up but the aggregate demand curve will not shift. C goods that are scarce, for which the quantity demanded exceeds the quantity supplied at a zero price.