How does a n increase in the contribution limits of Individual Retirement Accounts (IRA) is represented in the loanable funds model?
A) The supply of funds curve shifts to the left.
B) The supply of funds curve shifts to the right.
C) The demand for funds curve shifts to the left.
D) The demand for funds curve shifts to the right.
B
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Which of the following is a measure of economic growth that is most useful for measuring changes in the overall size of an economy?
A. decreases in the rate of unemployment B. increases in real GDP C. increases in real GDP per capita D. growth in nominal GDP
The minimum wage is set above the equilibrium wage rate. Does the minimum wage create inefficiency?
A) Yes B) No C) Only if the supply of labor is perfectly inelastic D) Only if the supply of labor is perfectly elastic E) Only if employment exceeds the efficient amount
If the Federal Reserve announces that its target for the federal funds rate is falling from 3 percent to 2.25 percent, how do you expect workers and firms to react?
A) As long as the Fed's announcement is credible, workers and firms will increase their consumption and investment spending, which will increase aggregate demand and inflation. B) As long as the Fed's announcement is credible, workers and firms will decrease their consumption and investment spending, which will decrease aggregate demand and inflation. C) Workers and firms will incorporate the decrease in interest rates into their expectations of inflation, and they will expect inflation to fall as a result of Fed's policy announcement. D) If the Fed's announcement is not credible, workers and firms will not expect inflation to rise so they will increase their consumption and investment spending, which will decrease aggregate demand and increase inflation.
Refer to Figure 14.1. Other things equal, a decrease in government spending on infrastructure projects is best represented as a movement from
A) point A to point B. B) point C to point A. C) point C to point B. D) point B to point C.