Exhibit 14-4 Aggregate supply and demand curves
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As the economy moves to the right from E1 to E2 in Exhibit 14-4 along the upward-sloping aggregate supply curve the:
A. unemployment rate rises.
B. unemployment rate falls.
C. inflation rate falls.
D. full employment GDP is realized.
Answer: B
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A current concern about Social Security is that
A) funds set aside by past generations to pay benefits for future generations are growing too rapidly and may trigger inflation. B) promised benefit payouts are growing more rapidly than likely sources of revenues, indicating a future inability to keep the system operating. C) continued political bickering between the president and Congress could lead to an end to any funding of the program. D) the payroll taxes used to fund the program are being eliminated as part of an effort to generate employment increases, thus leaving the program bankrupt.
The law of demand states the basic price/quantity relationship of consumption incentives. What does the concept of "price elasticity" add to that knowledge?
What will be an ideal response?
Calculate the equilibrium interest rate.
Consider the closed economy of country A where KI = 0. In year 2009, government expenditure (G) is $300 billion, the total tax collected (T) is $900 billion and tax being transferred (TR) is $200 billion. The loanable fund market is currently in equilibrium, and the total demand equation (including SG) is DLF: r =0.04 - 0.000025Q, where r is the real interest rate, and that private saving, SP, equals $800 billion at equilibrium
The law of supply indicates that an increase in price will cause an increase in supply which is reflected graphically as a rightward shift of the supply curve
a. True b. False Indicate whether the statement is true or false