A decrease in the interest rate causes
A) movement up the IS curve.
B) movement down the LM curve.
C) the IS curve to shift to the left.
D) the LM curve to shift to the right.
B
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If shoes rise in price, the demand curve for shoes ________ and the quantity of shoes demanded ________
A) shifts leftward; decreases B) shifts leftward; does not change C) does not shift; decreases D) does not shift; does not change
Suppose the two countries can trade shares in the ownership of their perspective assets without any restrictions. Assume that the consumers in both countries would like to totally smooth their consumption. Describe the outcomes
What will be an ideal response?
With reference to the graph above, if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers, then normative analysis would conclude that:
A. the policy was effective, since surplus gained by consumers through lower prices is less than the surplus they lost through deadweight loss.
B. the policy was ineffective, since surplus gained by consumers through lower prices is less than the surplus they lost through deadweight loss.
C. the policy was effective, since surplus lost by producers through lower prices is less than the surplus gained by consumers through lower prices.
D. there is no "right" conclusion to be reached (in a normative sense), since people have different opinions concerning what constitutes a better outcome.
What is a shortcoming of price control legislation?
a. Price controls lower the quantity demanded. b. Price controls often lead to reduced product quality. c. Price controls create surpluses. d. All of the above are shortcomings of price controls.