Explain for each event whether it changes the quantity of real GDP demanded or aggregate demand in the United States
What will be an ideal response?
• U.S exports to the European Union boom.
The increase in U.S. exports increases U.S. aggregate demand.
• U.S. firms build new gas-fuel utilities.
Building new plants in the United States increases U.S. aggregate supply, which brings a change in the quantity of real GDP demanded. Building the new plants also increases investment, which increases aggregate demand.
• U.S. inflation rate is expected to rise next year.
The increase in the expected inflation rate increases aggregate demand.
• The U.S. price level rises.
The rise in the U.S. price level leads to a change in the quantity of real GDP demanded.
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Taxes are the only mechanism by which the federal government earns money
Indicate whether the statement is true or false
In 2015, some banks in Europe had to make interest payments to borrowers rather than receive interest payments from borrowers. Which of the following statements describes this situation?
A) For these banks, the loans increased required reserves. B) For these banks, the loans were liabilities instead of assets. C) These banks were receiving negative nominal interest rates on these loans. D) All of the above are correct.
The equilibrating force in the credit market in the classical model is
A) the interest rate. B) the price level. C) full employment. D) fiscal policy.
A good that is available for everyone to consume, regardless of who pays and who doesn't, is called a:
A. private good. B. external good. C. public good. D. spillover good.