Deflation is bad because:
A. wages decline.
B. prices decline.
C. monetary policy becomes impotent.
D. fiscal policy becomes impotent.
E. deflation is not bad.
Ans: C. monetary policy becomes impotent.
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Which of the following is not a situation involving external shock?
(A) Consumers reduce spending on expensive goods because the country has gone to war. (B) Consumers use more gasoline because of lower prices due to the discovery of large deposits of oil. (C) Consumers pay high prices for corn because of a severe drought. (D) Consumers reduce spending because they fear that their nation is going to war.
Refer to the Article Summary. The increase in GDP discussed in the article summary was due in part to increases in commercial and residential construction
Increases in commercial and residential construction will cause a(n) ________ the aggregate expenditure curve. A) movement down along B) downward shift of C) upward shift of D) movement up along