The greater the MPC:
a. the greater the fraction of an increase in AD due to an increase in government purchases that is consumption.
b. the smaller the fraction of an increase in AD due to an increase in government purchases that is consumption.
c. the greater the change in government purchases required to achieve a given change in AD
d. none of the above
a
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If the yield curve slope is flat for short maturities and then slopes steeply upward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
A) a rise in short-term interest rates in the near future and a decline further out in the future. B) constant short-term interest rates in the near future and further out in the future. C) a decline in short-term interest rates in the near future and a rise further out in the future. D) constant short-term interest rates in the near future and a decline further out in the future.
An increase in the price level will
a. decrease the quantity of aggregate demand, shown as a downward movement along the existing aggregate demand curve b. decrease the quantity of aggregate demand, shown as an upward movement along the existing aggregate demand curve c. cause a rightward shift in the aggregate demand curve d. cause a leftward shift in the aggregate demand curve e. have no effect on the aggregate demand curve
Of all the payments made to factors of production in the United States in 2013, ____ received the lowest share
a. land rents b. labor c. interest payments d. corporate profits
Inflation frees policy makers from:
A. the zero interest rate upper bound. B. the 2.5 percent interest rate lower bound. C. the 2.5 percent growth rate bound. D. the zero interest rate lower bound.