A decrease in money supply causes the real interest rate to ________ and output to ________ in the short run, before prices adjust to restore equilibrium.
A. rise; fall
B. rise; rise
C. fall; fall
D. fall; rise
Answer: A
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The $787-billion stimulus package enacted by the federal government in 2009 to try to deal with the Great Recession was intended to
A. push the aggregate expenditures schedule upward. B. close an inflationary expenditures-gap. C. shift the aggregate expenditures schedule down. D. bring inflation down.
Which of the following is true? a. The private market provides too much of goods that generate external benefits
b. In the case of external benefits, if we could add the benefits that are derived by non-paying consumers, the supply curve would shift to the right, increasing output. c. In the case of external benefits, a tax equal to external benefits would result in an efficient level of output. d. In the case of public goods, when people act as free-riders, some goods having benefits greater than costs will not be produced.
If personal income taxes are increased, disposable income and consumption
a. increase. b. stay the same. c. decrease. d. change in an unpredictable direction.
Which statement is true?
A. The federal, state, and local governments collect a combined total of over 40 percent of our GDP in the form of taxes. B. A rich person has a much lower marginal tax rate on their personal income taxes today than she did in 1980. C. The federal government spends more on foreign aid than it does on Medicare. D. Most Americans pay more in federal personal income tax than they do in payroll tax.