In the income-expenditure model, if autonomous investment decreases by $10 billion,
What will be an ideal response?
the aggregate expenditure line shifts downward by $10 billion
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Under a nominal GDP targeting rule, the Federal Reserve
A) changes the interest rate only when real GDP, and hence nominal GDP, is off target. B) cannot use the federal funds rate to conduct monetary policy. C) must publish its expected inflation rate. D) lowers its interest rate when nominal GDP falls below target. E) loses its ability to influence the inflation rate.
Refer to Figure 6-2. The absolute value of the price elasticity of demand at points a and b is 1. What is the value of Pb?
A) $50 B) $40 C) $30 D) $20
Reducing the government's budget deficit will certainly increase economic growth
a. True b. False
Joe and Pam are neighbors. Joe asks Pam to drive him to the airport. Before leaving, Joe pays for Pam to fill her car's gas tank at the local gas station. Joe's trip to the airport would be ________.
A. not counted in GDP because the trip does not involve any formal market transactions B. counted in GDP because Joe purchased the gas C. not counted because nothing was actually produced D. counted in GDP because Joe and Pam represent different households