The real-balance effect refers to
A. the economy's ability to balance recession and expansion.
B. the economy's response to interest rate changes.
C. the change in the value of cash balances due to price level changes.
D. the change in net exports.
Answer: C
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Under a regressive income tax system, individuals with higher incomes pay higher marginal tax rates
a. True b. False
When dealing with strategic trade policy, one practical problem for government is the likelihood of retaliation by foreign governments
a. True b. False Indicate whether the statement is true or false
How does a change in taxes primarily affect aggregate demand? a. A tax change alters exports and net exports
b. A tax change alters investment by an equal and opposite amount. c. A tax change alters disposable income and consumption spending. d. A tax change alters government purchases by an equal amount.
In Econland autonomous consumption equals 700, the marginal propensity to consume equals 0.80, net taxes are fixed at 50, planned investment is fixed at 100, government purchases are fixed at 100, and net exports are fixed at 40. Planned aggregate expenditure equals:
A. 990 + 0.80Y. B. 990 + 0.20Y. C. 900 + 0.80Y. D. 940 + 0.80Y.