Refer to Figure 10.7. A movement from point C to point B could be caused by
A) an increase in consumer confidence accompanied by a decrease in the target interest rate.
B) a decrease in consumer confidence accompanied by an increase in the expected rate of inflation.
C) a negative demand shock accompanied by an increase in the term structure effect.
D) a positive demand shock accompanied by a decrease in the default-risk premium.
C
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From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply, then the Federal Reserve would most likely
A) decrease interest rates. B) decrease income tax rates. C) increase interest rates. D) increase income tax rates.
Unit excise taxes imposed on gasoline, alcohol, and cigarettes are
A) largely paid by the producers because they want to maintain their level of sales. B) largely paid by consumers because they are not very responsive to price changes. C) shared equally between the producer and the consumer. D) paid by the wholesalers of these products.
Suppose the price elasticity of demand for iPods is inelastic. What would you expect about the demand elasticity for workers producing iPods? Explain
What will be an ideal response?
Answer the following questions:
a. What is the difference between gross domestic product and gross national product? b. Give an example of a transaction that would be counted in GDP but not in GNP. c. Give an example of a transaction that would be counted in GNP but not GDP.