The circular flow of economic activity is a model of the:
a. flow of goods, services, and payments between households and firms.
b. influence of government on business behavior
c. role of unions and government in the economy.
d. interaction among taxes, prices, and profits.
a
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The change illustrated in the figure above is part of the transmission process of the Fed's monetary policy
As a result of the increase in the supply of loanable funds, in the short run aggregate demand ________, aggregate supply ________, and potential GDP ________. A) increases; does not change; does not change B) increases; increases; increases C) decreases; increases; increases D) increases; decreases; decreases E) decreases; decreases; decreases
Open market sale of government securities by the Fed decreases the federal funds rate
Indicate whether the statement is true or false
If income increased by $20,000 . investment spending is fixed at $5,000 . government purchases are fixed at $10,000 . net exports are fixed at $500, and aggregate expenditure increases by $15,000 . what is the marginal propensity to consume (MPC)?
a. 0.25 b. 0.75 c. 0.33 d. 0.50 e. 0.70
Abstraction can lead to gross distortions of pertinent facts
a. True b. False Indicate whether the statement is true or false