If the LM curve is vertical and government spending rises by G, in the IS-LM analysis, then equilibrium income rises by:
What will be an ideal response?
zero.
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Refer to Figure 16-11. In the graph above, the shift from AD1 to AD2 represents the total change in aggregate demand. If government purchases increased by $50 billion, then the distance from point A to point B ________ $50 billion
A) would be greater than B) would be equal to C) would be less than D) may be greater than or less than
In the short run, a profit-maximizing firm's decision to produce should be guided by whether
A) its total revenue exceeds its fixed cost. B) its total revenue covers its variable cost. C) it makes a profit. D) its marginal profit is maximized.
An increase in the real interest rate will cause an increase in ________
A) saving B) planned investment C) net exports D) all of the above E) none of the above
An increase in demand involves
A) Movement along the demand curve. B) A shift in the supply curve to the right. C) A shift in the demand curve to the left. D) None of the above.