Use the following table with data for a private closed economy (an economy with only a private sector and no international trade) to answer the next question.All figures are in billions of dollars.Expected Rate of ReturnInvestmentConsumptionGDP10%$0$400$4008100500600620060080043007001,00024008001,20005009001,400An increase in the real interest rate from 2% to 6% will
A. increase the equilibrium level of real GDP by $400 billion.
B. decrease the equilibrium level of real GDP by $400 billion.
C. increase the equilibrium level of real GDP by $300 billion.
D. decrease the equilibrium level of real GDP by $200 billion.
Answer: B
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In a study published in 1963, Milton Friedman and Anna Schwartz found that in every business cycle they studied over nearly a hundred-year period
A) the growth rate of the money supply decreased before output decreased. B) interest rates decreased before output decreased. C) the growth rate of federal government spending decreased before output decreased. D) the growth rate of state and local government spending decreased before output decreased.
Relative to the United States, Europe has
A) higher unemployment. B) slower job growth. C) higher real wage growth. D) A and B. E) all of the above.
Since 1929, real GDP in the United States has grown at an average annual rate of about:
a. 0.5 percent. b. 1 percent. c. 3 percent. d. 7.5 percent.
Will a binding price floor result in a shortage or a surplus in the market?