Tax cuts on business income increase aggregate demand by increasing
A) wage rates. B) government spending.
C) consumption spending. D) business investment spending.
Ques. 2Refer to Figure 23-3. Suppose that government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP1 to GDP2, and this amount is 200 billion. If the MPC is 0.
8, then what is the distance between N and L or by how much did government spending change?
A) 16 billion B) 40 billion C) 200 billion D) 1,000 billion
Ques. 3The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.
Indicate whether the statement is true or false
Ques. 4An increase in individual income taxes ________ disposable income, which ________ consumption spending.
A) decreases; increases B) increases; increases
C) decreases; decreases D) increases; decreases
Ques. 5Stagflation occurs when inflation ________ and GDP ________.
A) rises; falls B) falls; rises C) falls; falls D) rises; rises
Ques. 6When actual inflation is less than expected inflation
A) borrowers lose and lenders gain. B) borrowers gain and lenders lose.
C) borrowers and lenders both lose. D) borrowers and lenders both gain.
Ques. 7Refer to Figure 28-6. If firms and workers have adaptive expectations, an expansionary monetary policy will cause the short-run equilibrium to move from
A) point C to point B.
B) point B to point C.
C) point A to point B.
D) point B to point A.
E) point A to point C.
Ques. 8In the United States, the average length of expansions from 1950 to 2009 was more than twice as long than they were from 1900 to 1950.
Indicate whether the statement is true or false
Ques. 9The cost to firms of changing prices
A) is called a menu cost.
B) is small even when there is rapid inflation.
C) does not exist if inflation is perfectly anticipated.
D) all of the above
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