In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. Suppose that a combination of fiscal stimulus and recovery of consumer and business confidence shifts the IS and AD curves, as shown in the figure
The equilibrium real interest rate is ________ percent. A) 3
B) one
C) 2.5
D) 2
E) zero
C
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Tariffs and import quotas both result in
A) lower levels of domestic production. B) the domestic government gaining revenue. C) lower levels of imports. D) higher levels of domestic consumption.
The Federal Deposit Insurance Corporation:
a. has eliminated bank failures. b. insures all demand deposits without limit. c. insures all demand deposits up to $100,000. d. insures all demand deposits up to $10,000. e. insures all savings and loan deposits up to $100,000.
The production function (or output per laborer) curve is
a. upward sloping and arched to reflect the law of constant returns b. upward sloping and arched to reflect the law of diminishing returns c. downward sloping and arched to reflect the law of increasing returns d. downward sloping and arched to reflect the law of diminishing returns e. horizontal, its level depending on the capital output ratio
Whenever net external benefits exist then:
A.) economic profits are zero. B.) the social demand exceeds the market demand. C.) the benefits associated with a product fall short of those accruing to the market. D.) product differentiation increases the variety of products available to consumers.