Which of the following effects helps to explain the slope of the aggregate-demand curve?
a. the exchange-rate effect
b. the wealth effect
c. the interest-rate effect
d. All of the above are correct.
d
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How do the labor force, the nation’s capital stock, and the rate of technical progress contribute to potential GDP growth and labor productivity?
What will be an ideal response?
An increase in saving
A. decreases the amount of resources available for investment. B. increases the amount of resources that can be devoted to the purchase of capital goods. C. reduces real GDP by decreasing consumption. D. increases a country's present standard of living.
Which of the following is an example of an automatic stabilizer?
A. Congress legislates lower tax rates to increase consumption and investment. B. Tax rates are increased during a recession to maintain a balanced budget. C. A regressive income tax system reduces tax revenues (as a share of income) as income expands. D. Revenues from the corporate income tax increase sharply during a business boom but decline substantially during a recession, even though no new tax legislation has been enacted.
Which of the following is a component of aggregate demand?
What will be an ideal response?