Refer to the table above. An increase in the real interest rate from 2% to 6% will:
A. Decrease the equilibrium level of GDP by $200 billion
B. Decrease the equilibrium level of GDP by $300 billion
C. Decrease the equilibrium level of GDP by $400 billion
D. Increase the equilibrium level of GDP by $400 billion
C. Decrease the equilibrium level of GDP by $400 billion
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A negative externality
A) occurs under any undesirable event. B) occurs when an action doesn't take into account the costs it imposes on others. C) can be a natural phenomenon, such as being struck dead by a bolt of lightening. D) cannot occur at the same time as a positive externality.
The use of expansionary fiscal and monetary policy just prior to elections is known as the ________
A) electoral college B) time-inconsistency problem C) Watergate scandal D) political business cycle
Economists assume people's tastes are
a. determined solely by advertising b. relatively stable over time c. quite variable d. irrelevant to utility analysis e. identical
Suppose a restaurant that is highly profitable during the summer months is unable to cover its total cost during the winter months. If it wants to maximize profits, the restaurant should
a. shut down during the winter, even if it is able to cover its variable costs during that period. b. continue operating during the winter months if it is able to cover its variable costs. c. go a out of business immediately; losses should never be tolerated. d. lower its prices during the summer months.