Refer to the diagram and assume the economy initially is in equilibrium at point a. In the mainstream view, a decline in aggregate demand from AD 1 to AD 2 would likely move the economy:
A. directly from a to d.
B. directly from a to b.
C. from a to c, then quickly from c to d.
D. from a to c, then eventually from c to b.
B. directly from a to b.
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The government imposes a unit excise tax on bubble gum. What happens as a result?
A) The equilibrium quantity of bubble gum increases. B) At the original market price, there will be a bubble gum surplus so price decreases. C) At the original market price, there is a bubble gum shortage and so price rises. D) There will be no change in either the market price or equilibrium quantity as long as the excise tax rate is 5 percent or less.
Ceteris paribus, if the U.S. dollar depreciated in relation to the Canadian dollar, which of the following would be true? a. U.S. goods would become less expensive to Canadian consumers
b. Canadian goods would become more expensive to Canadian consumers. c. U.S. goods would become less expensive to European consumers. d. all of the above