According to Say's law, there cannot be overproduction of goods and services because:
A. planned aggregate expenditures sometimes fall short of total output.
B. prices and wages are "sticky" or inflexible in the downward direction.
C. demand creates its own supply.
D. supply creates its own demand.
Answer: D
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When the price of pizzle trees increased by 20 percent last year, consumers ended up spending 10 percent more on the purchase of pizzle trees. This shows that the demand for pizzle trees
A) was elastic. B) was inelastic. C) was unit elastic. D) did not obey the law of demand.
Assume that seigniorage and the government's primary deficit are both zero. If the real interest rate is greater than the growth rate of real GDP, the debt-to-GDP ratio
A) will increase. B) will decrease. C) will either decrease or not change. D) will either increase or not change.