Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y2.
C. P3 and Y1.
D. P2 and Y3.
Answer: D
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
Interest rates typically rise when
A) bond prices increase. B) bond prices decrease. C) the coupon payout on existing bonds increase. D) the maturity date on existing bonds extends farther into the future.
If domestic saving is greater than domestic investment, then a country will have a ________ and positive net capital ________.
A. trade deficit; inflows B. trade surplus; outflows C. trade deficit; outflows D. trade surplus; inflows
Because investment, consumption expenditure, and net exports are interest-sensitive components of expenditure, a ________ in the federal funds rate brings ________ in ________
A) fall; a decrease; aggregate supply B) rise; an increase; aggregate supply C) fall; an increase; aggregate demand D) rise; an increase; aggregate demand E) fall; a decrease; aggregate demand