In a certain economy, the components of aggregate spending are given by: C = 500 + 0.8(Y - T) - 300rI = 200 - 400rG = 200NX = 10T = 150Given the information about the economy above, what would be the impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r)?
A. Aggregate expenditures would decrease by 35 units.
B. Aggregate expenditures would decrease by 7 units.
C. Aggregate expenditures would increase by 35 units.
D. Aggregate expenditures would decrease by 700 units.
Answer: B
You might also like to view...
Which statement is the most accurate?
A. Most welfare mothers have had child after child to get larger welfare payments. B. Most welfare families have three or more children. C. There are many theories of poverty, but none provides more than a partial explanation. D. The conservatives and liberals are in basic agreement about the causes of poverty.
What are the Euler Equations?
A. another name for the objective function B. another game for the first order conditions, defining optimal choices C. equations relating the optimal choice of interest rates to other prices D. both A and B, but not C
Suppose that you are short in the cash market. Which of the following strategies creates a price ceiling for your purchased corn?
A. Take a long position in the futures market. B. Take a short position in the futures market. C. Buy a put option. D. Buy a call option.
A trade surplus provides a measure of the gap between exports and imports
a. True b. False Indicate whether the statement is true or false