In the simple aggregate expenditure model, the slope of the aggregate expenditure line depends on:
a. interest rates
b. real gross domestic product.
c. the price level.
d. the marginal propensity to consume.
e. the marginal propensity to save.
d
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Refer to the above figure. Suppose the relevant aggregate demand curve is AD2. If the government wants to use fiscal policy to close the existing gap, it should
A) increase government spending. B) increase taxes. C) increase the money supply. D) decrease taxes.
A contractionary monetary policy is likely to lead to ________
A) lower real interest rates B) lower real wages C) a lower demand for labor D) a lower supply of labor
The value by which the nominal GDP of an economy exceeds its real GDP in percentage terms is equal to the: a. rate of inflation in the economy. b. rate of deflation in the economy. c. GDP deflator of the economy
d. GDP inflator of the economy.
The Earned Income Tax Credit (EITC) is a more efficient means to redistribute income to people below the poverty line than direct cash transfers.
Answer the following statement true (T) or false (F)