Which of the following sequences results from a decrease in the price level?
a. the money demand curve shifts leftward, the interest rate decreases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts upward, and there is a rightward movement along the aggregate demand curve.
b. the money demand curve shifts rightward, the interest rate increases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts downward, and there is a rightward movement along the aggregate demand curve.
c. the money demand curve shifts leftward, the interest rate decreases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts upward, and there is a leftward movement along the aggregate demand curve.
d. the money demand curve shifts rightward, the interest rate decreases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts upward, and there is a movement upward along the aggregate demand curve.
e. the money demand curve shifts leftward, the interest rate increases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts upward, and there is a leftward movement along the aggregate demand curve.
A
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Assume that production from a automobile manufacturer caused acid rain. If the government imposed a tax on the manufacturer equal to the cost of the acid rain, the government's action would
A) externalize the externality. B) eliminate all acid rain. C) force the manufacturer to move production to another location. D) internalize the externality.
Suppose an individual's MRS (of steak for beer) is 2:1 . That is, at the current consumption choices he or she is willing to give up 2 beers to get an extra steak. Suppose also that the price of a steak is $1 and a beer is $4 . Then in order to increase utility the individual should:
a. buy more steak and less beer. b. buy more beer and less steak. c. continue with current consumption plans.