In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the IS curve shifts down and to the left, and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run, it will
A. not shift the LR curve.
B. shift the IS curve up and to the right.
C. shift the LR curve down.
D. shift the LR curve up.
Answer: C
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What will be an ideal response?
Expansionary fiscal policy would involve ________, whereas contractionary fiscal policy would involve ________
A) increasing the money supply; increasing personal income taxes B) increasing corporate income taxes; raising interest rates C) increasing transfer payments; increasing corporate income taxes D) increasing government purchases; increasing transfer payments
In a franchised network in which all managers are required to pay a percentage of their sales to pay for system-wide advertising, there ________ a free -rider problem and it is ________ likely that the system-wide quantity of advertising will be optimal.
A) is; less B) is not; more C) is not; less D) is; more
A utility function is a mathematical function that assigns values to consumption bundles to represent the:
A. consumer's income. B. consumer's preferences. C. marginal rate of substitution. D. prices of the goods in the consumption bundle.