Which of the following is not true with regard to the aggregate expenditure model?
a. It explains short-run business cycles
b. It explains inflation.
c. It assumes that consumption spending is the primary determinant of aggregate demand.
d. It includes investment, government spending, and net exports.
b
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Which of the following is an example of consumer surplus?
A) Jose buys a hamburger for $2 and tells you he would not have paid a penny more. B) John believes the price he paid for his computer was too high. C) Mary buys a paper tablet for $2 and finds the same good at another store for $1.50. D) Sue would have paid $15 for a new compact disc but paid only $10. E) Anne finds a mountain bike for which she is willing to pay a maximum of $550 and the price of the bike is $600.
If U.S. prices increase relative to the rest of the world, we would expect imports:
A. to decrease and exports to increase. B. to increase and exports to fall. C. as well as exports to increase. D. as well as exports to decrease.