Refer to Figure 24-1. Ceteris paribus, a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
B
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Refer to the diagram, in which Q f is the full-employment output. If the economy's current aggregate demand curve is AD 3 , it would be appropriate for the government to:
A. reduce government expenditures and taxes by equal-size amounts.
B. reduce government expenditures or increase taxes.
C. increase government expenditures or reduce taxes.
D. reduce unemployment compensation benefits.
Assume the United States and Australia have the same amount of resources. In a given time period, the United States can produce 2 tons of beef or 200,000 cars. Australia can produce 1 ton of beef or 100,000 cars. This means that
A. Australia has an absolute advantage in both beef and cars. B. The United States has a comparative advantage in beef. C. The United States has an absolute advantage in both beef and cars. D. Australia has a comparative advantage in cars.