If we observe both an increase in the price of flour and in the number of units sold, this could be explained by:
a. an increase in the demand for flour.
b. a decrease in the demand for flour.
c. a decrease in the supply of flour.
d. an increase in the supply of flour.
Question 2
Supply-side economics stress that:
a. aggregate demand is the major determinant of real output.
b. higher tax rates discourage people from working and investing as much as they would at lower tax rates.
c. an increase in government expenditures and tax rates will cause real income to rise.
d. expansionary monetary policy will cause real output to expand without accelerating inflation.
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