An increase in the money supply will
a. increase interest rates, decreasing investment and aggregate demand.
b. reduce interest rates, increasing investment and aggregate demand.
c. reduce interest rates, decreasing investment and increasing aggregate demand.
d. increase interest rates, increasing investment and aggregate demand.
b
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The credit demand curve is the schedule that reports the relationship between the quantity of credit demanded and ________ in an economy, assuming all else equal
A) the average tax rate B) the annual inflation rate C) the nominal rate of interest D) the real rate of interest
Currently, the price of consuming housing is lowered by the fact that home mortgage interest is tax deductible. Suppose the government proposed to eliminate this implicit subsidy of your housing consumption and at the same time lowers taxes on all other goods.
a. With housing consumption on the horizontal axis and all other consumption on the vertical, illustrate you current optimal consumption bundle. b. After looking over the government's proposal, you decide that you don't care one way or another whether the government implements this proposal. On your graph, indicate your new budget constraint and new optimal bundle under the proposal. c. I also look over the proposal and find that my current consumption bundle also lies on the budget constraint I would face under the proposal. Am I also indifferent between the two proposals? What will be an ideal response?
What does a firm's short-run total product curve show and what is its significance?
What will be an ideal response?
Brazil's export record in 1999 illustrated the principle that
A) a large country will tend to have few exports. B) a small country will tend to have a high export ratio. C) protectionist policies tend to discourage exports. D) export-promoting policies do not tend to work. E) import substitution policies helped the Brazilian economy.