For this question, assume that investment spending depends only on the interest rate and no longer depends on output. Given this information, a reduction in the money supply
A) will cause investment to decrease.
B) will cause investment to increase.
C) may cause investment to increase or to decrease.
D) will have no effect on output.
E) will cause a reduction in output and have no effect on the interest rate.
A
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Refer to the above figure. The government has just engaged in expansionary fiscal policy shifting the aggregate demand curve from AD1 to AD2. Interest rates have started to rise. Which of the following statements is TRUE in the short run?
A) Real GDP will be $14 trillion since the effect of government spending is not influenced by interest rates. B) Real GDP will end up somewhere between $11 and $14 trillion as businesses and consumers reduce their spending in response to the increase in interest rates. C) Real GDP will go beyond $14 trillion as businesses and consumers react to the increase in interest rates. D) Real GDP will fall back to $11 trillion since the effect that increased government spending has on real GDP is short lived.
Economists believe that only a small part of human behavior can be explained and predicted by assuming that most people act as if they are motivated by their own self-interest in an effort to increase their expected personal satisfaction
a. True b. False Indicate whether the statement is true or false
The required reserve ratio in an economy is 12.8 percent. If two banks, Bank A and Bank B, receive deposits of $25,000 and $37,500, respectively, then the value of the money multiplier in the economy is: a. 10.00. b. 12.50. c. 6.25
d. 8.00.
which of the following contributed to the soaring housing prices of 2002-2005
What will be an ideal response?