Say's Law states that Increased prices lead to increased supply. Shifts of either supply or demand can achieve a given market equilibrium. Supply creates its own demand. Wages and prices are inflexible, which prevents the achievement of market equilibrium.

Assume the MPC is 0.75. If the government wants to eliminate an AD excess of $500 billion, it should Increase taxes by $375 billion. Increase taxes by $500 billion. Cut taxes by $125 billion. Increase taxes by $166.67 billion.

Which of the following would cause the investment demand curve to shift to the right? Imposing business tax on firms. Expectations of good future sales. A lower level of income in the economy. A decrease in the rate of interest.

Suppose that the multiplier is 4. If the desired fiscal restraint is $350, then which of the following is true? There is an AD excess of $350. There is an AD shortfall of $467.67. There is an AD excess of $1400. There is an AD shortfall of $1400.

If the MPS is 0.25, and the disposable income increases from $20,000 to $25,000, then consumption will increase by, $18,750 $3,750 $15,000 $1,250

An increase in transfer payments has smaller impact on aggregate demand than an increase in government spending because transfer payments do not impact the disposable income directly. The statement in the question is not true. a portion of the transfer payment is diverted away from the circular flow model of income. a portion of the transfer payment is reinvested into firms according to the circular flow model of income.

Which of the following explains the real balances effect? An increase in the price level raises the rate of interest, which can lead to less borrowing and less spending. An increase in the price level decreases the price of foreign goods, which can lead to more imports. An increase in the price level decreases the price of domestic goods, which can lead to more exports. A decrease in the price level increases the value of savings, which can raise the quantity of goods and services purchased.