Which of the following describes the effect of government spending?
A. Govt spending increases, taxes increase, disposable income increases, consumption decreases, AD decreases, price and quantity decrease
B. Govt spending increases, money supply increases, income decreases, investment increases, AD increases, price and quantity decrease
C. Govt spending increases, AD increases, price and quantity increase
D. Govt spending increases, consumption increases, AD increases, price and quantity decrease
Ans: C. Govt spending increases, AD increases, price and quantity increase
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Technological improvements are more likely to occur if
A) the economy is centrally planned. B) economic decisions are made by politicians rather than entrepreneurs. C) entrepreneurs are compensated with higher profits for taking risks. D) companies face little competition in their markets.
The World Trade Organization (WTO) promotes foreign trade and investment, or globalization. In recent years opposition to globalization has led to violent protests at meetings of the WTO. One reason for these anti-globalization protests is
A) protesters believe that free trade destroys the distinctive cultures of many countries. B) protesters believe that globalization will result in a return to communism in developing countries. C) protesters object to the loss of intellectual property (such as software programs and movies) that results from foreign trade and investment. D) foreign trade and investment are examples of zero-sum games.