Assume the government decides to reduce spending in order to reduce the budget deficit, which it financed by borrowing in the real credit market. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real credit market with demand for real credit shifting to the right.
b. Start the analysis in the real goods market with aggregate demand shifting to the left.
c. Start the analysis in the real goods market with aggregate supply shifting to the left.
d. Start the analysis in the real goods market with aggregate supply shifting to the right.
e. Start the analysis in the real credit market with demand for real credit shifting to the left.
.E
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New growth theory assumes that
A) all inputs experience diminishing returns. B) only random technological advances produce growth. C) knowledge does not experience diminishing returns. D) None of the above answers is correct.
If Y = $500 billion, autonomous consumption = $300 billion, and the marginal propensity to save = 0.20, then saving will equal
a. –$200 billion b. $200 billion c. –$100 billion d. $100 billion e. $40 billion
Compared to the 1950s, 60s, and 70s, today we have _______ strikes involving large numbers of workers.
A. substantially more B. somewhat more C. about the same number of D. substantially fewer
The inflation rate is:
A. the percentage change in the overall price level. B. is not something that can be accurately measured with the CPI. C. the central concept in microeconomics. D. a measure of the rate of increase in the cost of imported goods.