Question: Total income households have after paying taxes and receiving government transfers

Answer: disposable income

Question: Market failure may occur because

Answer: individual actions have side effects that are not properly taken into account by the market

Question: A graphical representation of the relationship between the total quantity of goods and services demanded and the price level

Answer: aggregate demand curve

Question: If banks were required to keep 100% of deposits in reserves, they could

Answer: make no loans

Question: The point on a business cycle when real GDP stops falling and begins rising

Answer: business cycle trough

Question: In the long run, changes in the money supply

Answer: affect only the price level but they do not change aggregate output

Question: The double coincidence of wants problem can be solved by

Answer: money

Question: An inflationary gap can be closed with

Answer: a decrease in government purchases

Question: Monetary policy affects GDP and the price level by

Answer: changing aggregate demand

Question: The short-run aggregate supply curve is positively sloped because

Answer: wages are sticky or don’t readily adjust to changes in economic conditions in the short run