The IS curve shows the combinations of output and the real interest rate for which
A. the goods market is in equilibrium.
B. an increase in output will cause the market-clearing interest rate to be bid up.
C. the labor market is in equilibrium.
D. the financial asset market is in equilibrium.
Answer: A
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When a country allows trade and becomes an importer of a good,
a. everyone in the country benefits. b. the gains of the winners exceed the losses of the losers. c. the losses of the losers exceed the gains of the winners. d. everyone in the country loses.
If the interest rate is 15%, the current market value of $1 to be delivered in one year is
A. $0.87. B. $0.91. C. $1.00. D. $1.15.
When interest rates in the U.S. increase, we could expect:
A. more foreigners investing in U.S. assets. B. less foreigners investing in U.S. assets. C. more U.S. citizens investing abroad. D. less U.S. citizens investing in U.S. assets.
A laissez faire policy approach during a recession would advocate
A. Increasing AS by funding programs that improve worker skills. B. Increasing AD by increasing government spending. C. Noninterference by the government. D. Increasing both AD and AS.