If people's expectations about future income improve so they think their future income will be higher than previously believed, then the AD curve
A) will not shift, but potential GDP will increase.
B) will shift leftward because people will spend less now.
C) will shift rightward because people will increase spending now.
D) and the AS curve will both shift leftward because people will increase their saving.
E) will not change until income actually rises.
C
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The "stimulus package"
What will be an ideal response?
The effect of a tariff on a foreign monopolist is similar to a large nation imposing a tariff on a small nation. What is the implication for the welfare of the home nation?
a. Only very large tariffs bring any benefit to the home nation. b. No tariffs are the best policy; all tariffs have a deadweight net loss. c. Small tariffs can be beneficial, but only to a certain point. d. The foreign producer may actually raise prices to make the tariff impossible to impose.