Which of the following is a component of aggregate demand?
a. Transfer payments from government
b. Taxation by government
c. Purchases by government
d. Borrowing by government
e. Saving by consumers
QUESTION 2Economic profit equals accounting profit minus implicit costs.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3The Reagan administration's policies were aimed at managing aggregate demand.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4Which of the following best illustrates the concept of derived demand?
a. A decrease in the price of glass causes the demand for plastic to decrease.
b. An increase in the demand for bread leads to an increase in the demand for flour.
c. A decrease in the price of air travel leads to an increase in the quantity demanded of air travel.
d. An increase in the demand for peanut butter leads to an increase in the demand for jelly.
QUESTION 5All of the following are variables that can be manipulated to affect fiscal policy except one. Which is the exception?
a. Personal income taxes
b. Government expenditures on goods and services
c. Government expenditures on unemployment benefits
d. The federal funds rate
e. Corporate income taxes
QUESTION 6Suppose a firm earns an accounting profit. This means the firm also earns a positive economic profit.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7Stagflation is a situation with high unemployment rates, high inflation rates, and little or no growth in the economy.
a. True
b. False
Indicate whether the statement is true or false
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