According to the Laffer curve, after raising the tax rate to some level, any further increase by government will cause tax revenues to decrease
Indicate whether the statement is true or false
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Decreases in aggregate demand move the economy down the short run aggregate supply and up the Phillips Curve
a. True b. False Indicate whether the statement is true or false
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and net nonreserve-related borrowing/lending in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP remains the same and net nonreserve-related borrowing/lending balance becomes more positive (or less negative). b. Real GDP rises and net nonreserve-related borrowing/lending balance becomes more negative (or less positive). c. Real GDP falls and net nonreserve-related borrowing/lending balance becomes more positive (or less negative). d. Real GDP and net nonreserve-related borrowing/lending balance remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Suppose that the economy is at an inflation rate such that unemployment is above the natural rate. How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer
Which of the following is not a component of the demand for loanable funds?
A. Household purchases of housing and durable consumer goods. B. Business purchases of capital goods. C. Government financing of the public debt. D. Household saving.