Which of the following most clearly illustrates the concept of derived demand?

Which of the following most clearly illustrates the concept of derived demand?
 a. An increase in the price of steak causes the demand for poultry to increase.
  b. An increase in the demand for new houses leads to an increase in the demand for construction workers.
  c. An increase in consumer income leads to an increase in the demand for services provided by the government.
  d. An increase in the demand for new cars causes the demand for used automobiles to rise.

QUESTION 2

Fiscal policy:
 a. uses the federal government's powers of spending and taxation to affect employment, the price level, and GDP.
  b. uses the federal government's control over the money supply and interest rates to affect employment, the price level, and GDP.
  c. can affect employment and prices, but not the level of GDP.
 d. can affect employment and the level of GDP, but not the price level.
 e. is most effective when employed by state governments rather than by the federal government.

QUESTION 3

If economic profit is zero, then a normal profit is earned.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

Stagflation in an economy can be effectively controlled by Keynesian demand management policies.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 5

The number of workers hired by a firm at a particular wage rate can be calculated if you know which of the following?
 a. c and d.
  b. Product supply curve.
  c. Marginal product of labor.
  d. Marginal factor cost.
  e. Marginal revenue product of labor.

QUESTION 6

Fiscal policy focuses on manipulating _____.
 a. aggregate demand to smooth out business fluctuations
 b. aggregate supply to smooth out business fluctuations
 c. both aggregate supply and aggregate demand to smooth out business fluctuations
 d. aggregate demand to stimulate the economy and aggregate supply to contract it
 e. short-run aggregate supply to stimulate the economy and aggregate demand to contract it

QUESTION 7

Constant returns to scale cause the long-run average cost curve to be:
 a. horizontal.
  b. vertical.
  c. upward-sloping.
  d. downward-sloping.

QUESTION 8

Keynes believed that the best method for tackling recessions was to reduce government spending and raise taxes, thereby reducing the federal budget deficit.
 a. True
  b. False
  Indicate whether the statement is true or false