Desired consumption is Cd = 2000 + 0.9Y - 100,000r - G, and desired investment is Id = 1000 - 45,000r. Real money demand is Md/P = Y - 6000i. Other variables are ?e = 0.03, G = 500, 
= 1000, and M = 2100.(a)Find the equilibrium values of the real interest rate, consumption, investment, and the price level.(b)Suppose government purchases decline to 400. What happens to the variables listed in part (a)? (c)Suppose government purchases rise to 600. What happens to the variables listed in part (a)? (d)What feature in this example leads to the result that you don't need to know the amount of taxes collected by the government to find the equilibrium?
What will be an ideal response?
| (a) | r = 0.02, C = 400, I = 100, P = 3. |
| (b) | C = 500, other variables are unchanged. |
| (c) | C = 300, other variables are unchanged. |
| (d) | Desired consumption depends on the level of government purchases, not taxes. This is an |
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According to the quantity theory, inflation is ultimately controlled by
a. private firms who set prices. b. the monetary authorities who control the money supply. c. those who control output. d. the price of oil.
Alexander Hamilton argued for a "National Bank" that would
a. provide the increased money supply necessary to accommodate increased business activity. b. lend money to the U.S. Treasury. c. serve as fiscal agent for the U.S. government. d. serve as a tax collection agency for the U.S. government. e. All of the above.
Money is defined as
a. the currency of a nation. b. anything that is commonly accepted in exchange for other goods and services. c. currency that has been designated as legal tender. d. notes issued by the U.S. Treasury and backed by gold.
Refer to the information provided in Figure 7.10 below to answer the question(s) that follow. 
Figure 7.10Refer to Figure 7.10. At Point A the absolute value of the slope of the q1 = 100 isoquant is
A. less than 2. B. exactly equal to 2. C. greater than 2. D. indeterminate from this information.