Suppose the economy was in equilibrium, and the national government increased spending by an expected amount equal to $200 billion. Monetarist theory would predict that:
a. Aggregate demand will rise, causing only real GDP to rise.
b. The real risk-free interest rate will rise, but real GDP will remain the same.
c. Aggregate demand will fall, and real GDP will fall.
d. Aggregate demand will rise causing only prices to rise.
e. Aggregate demand will rise causing both prices and real GDP to rise.
.B
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Heidi quit her job as a chef making $40,000 per year to start her own restaurant. The first year, Heidi's restaurant earned $100,000 in revenue. Heidi pays $50,000 per year in wages to the waitresses and hostess and $20,000 per year to buy food
What is Heidi's profit as measured by an accountant for the year? A) $80,000 B) $50,000 C) $30,000 D) -$10,000
Full integration would lower the effective tax rate on capital and, therefore, lead to increased saving.
A. True B. False C. Uncertain
As a result of an open market purchase, bank reserves
A) rise and interest rates fall. B) fall and interest rates rise. C) and interest rates both rise. D) and interest rates both fall.
The Clinton administration has recommended an increase in the tax on yachts to help pay for government programs. Which of the following is true?
A) The burden of this tax will fall entirely on yacht consumers. B) The burden of this tax will fall entirely on yacht manufacturers. C) The sales of yachts will decrease. D) The profit of yacht manufacturers will increase. E) Employment of workers in the yacht industry will increase.