How does an increase in government transfer payments affect aggregate demand?
A. It has the same effect as a tax increase, which lowers AD with a larger multiplier than a spending decrease.
B. It has the same effect as a tax cut, which increases AD but with a smaller multiplier than a change in spending.
C. It has the same effect as a spending increase, which increases AD with a larger multiplier than a tax cut.
D. It has the same effect as a spending decrease, which increases AD with a larger multiplier than a spending decrease.
Answer: B
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A customs union is:
a. a group of countries that agrees there will be "no rules" about trade—anything goes. b. a group of countries that agrees to eliminate customs fees and containerized shipping charges on goods traded among them. c. a group of countries agreeing to eliminate barriers to trade between themselves but keeping tariffs in place against the rest of the world. d. a group of countries that eliminates trade barriers among themselves and erects a common tariff against all other nations.
Monopolistic competition differs from perfect competition primarily because in
A. monopolistic competition, there are relatively few barriers to entry. B. perfect competition, firms can differentiate their products. C. monopolistic competition, entry into the industry is blocked. D. monopolistic competition, firms can differentiate their products.