Economics: The Basics 1st Edition by Mike Mandel

Exercise 2

Say whether each of the following statements is true or false.
a) Personal consumption is part of aggregate demand.
b) The wealth effect means that when prices drop, you can buy more with the money in your pocket.
c) The short-term aggregate supply curve is vertical.
d) If the price level rises, it becomes more attractive in the short run for businesses to hire workers.
e) A leftward shift of the long-term aggregate supply curve leads to a lower price level.
f) If the government boosts spending, the long-term effect is to lower unemployment.
g) Personal savings are what remains from household income after taxes and consumption spending.
h) The pool of money available for investment spending includes government savings.
i) The United States has a higher national savings rate than most other countries.
j) The United States is able to save more than it invests.
k) One explanation for the trade deficit is that consumers borrow too much.