If V is constant and Y is fixed, any change in M
A) leads to a smaller change in P. B) leads to a proportionate change in P.
C) leads to a larger change in P. D) does not lead to change in P.
B
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An upward-sloping supply curve suggests that producers
A) sell less at higher prices. B) sell more at lower prices. C) plan to sell more at a given, higher price. D) ignore marginal costs of production, and only focus on the demand for their product.
Refer to the above figure. Suppose the economy is at E and the government uses an expansionary fiscal policy to move the aggregate demand curve to AD2. In the end, the aggregate demand curve is still AD1. A possible reason for this is that
A. some of the increased government spending is not counted in GDP. B. the increased borrowing causes higher interest rates, which encourage people to save more and increase investment spending due to the extra saving. C. people increase saving because they anticipate higher future taxes, resulting in a reduction in current consumption spending that offsets the increased government spending. D. the economy is already at full employment.