Figure 9.1 shows three aggregate demand curves. A movement from point b to point c could be caused by a(n)
A) decrease in government spending. B) decrease in the price level.
C) decrease in taxes. D) increase in the money supply.
B
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Refer to Figure 4-4. At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?
A) Yes, because $18 shows what consumers are willing to pay for the product. B) No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit. C) Yes, otherwise consumers would not buy 40 units. D) No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit.
Suppose that a firm successfully introduces a highly profitable new product. If this new product is priced higher than existing substitute products, then the:
A. new product has greater marginal utility than the existing products. B. laws of economics have been violated. C. new product must have increasing, not diminishing, marginal utility. D. existing products were unprofitable to produce.