If government expenditures are increased by $50 billion, assuming all other factors stay constant, we would expect the initial impact of the increased spending to cause real GDP to
A. increase by $50 billion.
B. stay constant.
C. increase by less than $50 billion.
D. increase by more than $50 billion.
Answer: A
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Starting from equilibrium in the ISLM framework, a decrease in money demand results in
A) a rise in income and the interest rate. B) a rise in income and a decline in the interest rate. C) a decline in income and the interest rate. D) a decline in income and a rise in the interest rate.
Which of the following restricts the volume of international trade?
a. stable prices b. tariffs c. the law of comparative advantage d. a stable international monetary system
If demand and supply both decrease:
A) both price and quantity will be less. B) both price and quantity will go up. C) price will fall but quantity will go up. D) quantity will go down but the effect on price is indeterminate.
A government is running a budget surplus if:
A. government revenue is less than government spending. B. imports exceed exports. C. government revenue exceeds government spending. D. exports exceed imports.