Use the following graphs to answer the next question.
In the graphs, the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at point Y on the investment demand curve. Given these conditions, what policy should the Fed pursue to achieve a noninflationary, full-employment level of real GDP?
A. Increase aggregate demand from AD3 to AD2.
B. Increase interest rates from 4% to 8%.
C. Decrease the money supply from $225 billion to $150 billion.
D. Make no change in monetary policy.
Answer: D
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The labor force includes individuals who are:
I. Employed II. Unemployed III. Discouraged workers A) Both I and III B) I only C) Both I and II D) All I, II and III
If we were on curve J, the lowest three quintiles received about _____% of income.
A. 20
B. 40
C. 50
D. 60
According to economist Robert Barro, if parents are concerned about the welfare of their children, then each adult generation will voluntarily reduce the burden of federal debt on future generations, and thus forego the stimulative effect of deficit spending in the present
Indicate whether the statement is true or false
If five firms of similar sizes join to form a cartel, then it is most likely that
A) they will charge a common, lower market price. B) they will collectively produce less than before. C) all five firms will earn the same profits as before. D) all five firms as a group will have falling profits, but increased output.