Government changes in interest rates to regulate the economy are part of:
A. monetary policy.
B. fiscal policy.
C. debt policy.
D. liability policy.
Answer: A
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Suppose the president is successful in passing a $10 billion tax increase. Assume that taxes are fixed, the economy is closed, and the marginal propensity to consume is 0.8. What happens to equilibrium GDP?
A) There is a $50 billion increase in equilibrium GDP. B) There is a $40 billion increase in equilibrium GDP. C) There is a $40 billion decrease in equilibrium GDP. D) There is a $50 billion decrease in equilibrium GDP.
Refer to the above graph. The selection of which point on the production possibilities curve is most like to result in the largest increase in economic growth over time?
A. A B. B C. C D. DÂ
On any given day, ________ changes to achieve equilibrium in the money market
A) the nominal interest rate B) the price level C) the real interest rate D) the inflation rate E) real GDP
Suppose an increase in disposable income from $3 trillion to $3.2 trillion increases consumption from $2.5 trillion to $2.6 trillion. The marginal propensity to consume is _____
a. 0.1 b. 0.2 c. 0.5 d. 0.8 e. 0.9