Both Keynesian and monetarist theories emphasize the potential of aggregate demand shifts to alter macro outcomes.
Answer the following statement true (T) or false (F)
True
By altering spending, taxes, or the money supply, we can manipulate the AD curve.
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Input-output analysis is a technique used to solve complicated market equations.
Answer the following statement true (T) or false (F)
A decline in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________, everything else held constant
A) rise; LM; right B) rise; IS; right C) fall; IS; left D) fall; LM; left
Assume the economy is in a recession and the Federal government decides to cut personal income tax rates. All else equal, the cut in tax rates should
A) increase consumption expenditures and cause real GDP to increase relative to potential GDP. B) increase the nominal interest rate and cause potential GDP to increase relative to real GDP. C) decrease the real interest rate and decrease expectations of inflation. D) increase the target interest rate and cause real GDP to fall relative to potential GDP.
If there is a causal relationship between two variables X and Y
A) both should be used as explanatory variables. B) then the causal variable should be used as the explanatory variable. C) then they must be positively correlated. D) one of them can be omitted from the analysis.