If an increase in the price of good X leads to a decrease in the demand for good Y, then:
A. good X and good Y are substitutes.
B. good X and good Y are normal goods.
C. good X and good Y are complements.
D. good X is a normal good and good Y is an inferior good.
Answer: C
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Which of the following statements is(are) correct
a. As a result of the Great Depression of the 1930s, the quantity theory had come into disrepute, together with the rest of the classical theories. b. According to Friedman, the depression was caused by a fall in aggregate supply and not aggregate demand as believed by the Keynesians. c. As a result of the Great Depression of the 1930s, Friedman believed that the Keynesians had nothing to say about money demand. d. All of the above e. both b and c.
The monetarists would expect a tax cut to have a strong effect on output only if the spending increase was
a. financed by a sale of bonds. b. financed by a cut in government spending. c. financed by an increase in the money stock. d. accompanied by a reduction in the deficit.