In the income-expenditure model, if autonomous investment decreases by $10 billion, _____
a. the aggregate expenditure line shifts upward by $10 billion
b. planned saving increases by $10 billion
c. the aggregate expenditure line shifts downward by $10 billion
d. planned saving decreases by $10 billion
e. the equilibrium level of real GDP demanded increases by $10 billion
c
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In an attempt to raise sales, Hannah cut prices in her bookstore by 20 percent. If the dollar value of her sales remained constant, that indicates
a. old customers bought no more books. b. no new customers bought books. c. the quantity of books sold increased 20 percent. d. the demand curve is vertical.
Externalities cause the market mechanism to allocate goods and resources inefficiently because
a. nonconsenting third parties are generally not hurt by externalities. b. producers and consumers ignore signals given by the competitive market. c. prices are always higher than they should be. d. competitive markets fail to give producers and consumers correct price signals.