Use the LR curve to show what happens to output, the real interest rate, and the price level in the short run and in the long run if the government provides a tax credit to people who buy a new home, which leads to an increase in new housing
investment.
The tax credit causes desired investment to rise, shifting the IS curve up and to the right. The short-run equilibrium occurs at a higher level of output and an unchanged real interest rate. In the long run, the equilibrium must occur at the intersection of the FE line and the IS curve, so the existing real interest rate is not tenable; the price level will increase, causing the LM curve to shift up and to the left, leading the LR curve to shift up. Compared with the initial situation, output is unchanged, the price level is higher, and the real interest rate is higher.
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Two goods with a low cross elasticity of demand are competing in the same market.
Answer the following statement true (T) or false (F)
In the United States, income taxes are collected from two different sources: households and corporations
Indicate whether the statement is true or false
In the above figure, what is the amount of consumer surplus at the efficient quantity?
A) $0 B) $1,000 C) $2,000 D) $4,000
In understanding the differences of the impact of globalization on inflation in various nations it is important to consider
A) the degree of development in a nation. B) the structure of income taxes in the country. C) the degree of central bank independence. D) all of the above.