A temporary decrease in government purchases causes the real interest rate to ________ and the price level to ________ in general equilibrium
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
D
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Suppose that the expected inflation rate is 3 percent and the actual inflation rate is 6 percent. Then borrowers
A. are worse off and lenders are better off. B. and lenders are both worse off. C. are better off and lenders are worse off. D. and lenders are both better off.
The main effect of a decrease in labor demand that arises from a decrease in capital stock is
A) lower real wages. B) shifts in unemployment. C) a need for fewer immigrant workers. D) companies make fewer profits.
By analyzing aggregate demand through its component parts, we can conclude that, everything else held constant, a decline in the inflation rate causes
A) an increase in real interest rates, an increase in investment spending, and a decline in aggregate output demand. B) a decline in real interest rates, a decrease in investment spending, and an increase in aggregate output demand. C) a decline in real interest rates, an increase in investment spending, and an increase in aggregate output demand. D) an increase in real interest rates, a decline in investment spending, and a decline in aggregate output demand.
The American Recovery and Reinvestment Act, signed by President Barack Obama in 2009, aimed at: a. stimulating the aggregate demand in the economy
b. removing the supply bottlenecks in the economy. c. closing an expansionary gap through a contractionary fiscal policy. d. ensuring free trade flows across the world. e. providing higher unemployment benefits to the residents of the economy.