Some examples of conventional types of fiscal policy actions are changes in government purchases or in personal taxes.
Answer the following statement true (T) or false (F)
True
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Interest rates in the economy have fallen. How will this affect aggregate demand and equilibrium in the short run?
A) Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall. B) Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. C) Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. D) Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise.
The CPI was 120 in 2000 and 132 in 2001. Dorgan borrowed money in 2000 and repaid the loan in 2001. If the nominal interest rate on the loan was 12 percent, then the real interest rate was
a. 2 percent. b. 10 percent. c. 12 percent. d. 22 percent.
The demand for a pack of gum is ________ than is the demand for a steak because ________.
A. less price elastic; a pack of gum is more of a luxury. B. less price elastic; a pack of gum requires a smaller portion of one's income. C. more price elastic; a pack of gum is more of a luxury. D. more price elastic; a pack of gum requires a smaller portion of one's income.
"Effective demand" represents which of the following?
A) money demand B) demand for exports C) domestic demand D) the demand for labor E) aggregate demand