An increase in the real interest rate will:
a. Shift the consumption schedule upward
b. Decrease the amount of investment spending
c. Shift the investment demand curve to the right
d. Shift the investment demand curve to the left
b. Decrease the amount of investment spending
b. Decrease the amount of investment spending
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Based on the figure below, the economy is initially at point A on the monetary policy reaction function (RF1) and the aggregate demand curve (AD1). The actual rate of inflation is p' and the Federal Reserve's target inflation rate is p*1. 
If the Federal Reserve raises its target inflation rate to p*3, then the Federal Reserve's monetary policy reaction function will ________ and the aggregate demand curve will ________.
A. shift to RF2; shift to AD2 B. shift to RF3: shift to AD3 C. shift to RF3; shift to AD2 D. shift to RF2: shift to AD3
Which of the following is true? a. Even intangible goods can be subjected to economic analysis
b. Wealthy individuals who decide to donate money to charity face the constraints of scarcity. c. Increases in production would not enable us to eliminate scarcity. d. All of the above
Aggregate demand and supply curves have been widely used to analyze the performance of the macroeconomy. Figure 5-3 shows four diagrams that represent different changes in the macroeconomy. Choose the diagram that best represents the situations described in the following questions.Figure 5-3
Which graph in Figure 5-3 best represents the favorable macroeconomy of the late 1990s?
A. 1 B. 2 C. 3 D. 4
The largest category of gross domestic income is
A. interest. B. wages. C. profits. D. rent.