If government expenditure increases by $200 billion and taxes simultaneously increase by $200 billion, then aggregate demand
A) remains the same.
B) decreases no matter what happens to aggregate supply.
C) increases no matter what happens to aggregate supply.
D) increases only if aggregate supply increases.
E) increases only if aggregate supply decreases.
C
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Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 percent, the current inflation rate is 1 percent, and real GDP is 8 percent below potential real GDP
If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals A) -3 percent. B) -1 percent. C) 3.5 percent. D) 7 percent.
In the short run, producers derive surplus from market exchange because
a. total revenue is greater than the minimum they would require to sell the good b. total revenue is equal to the minimum amount they would require to sell the good c. total revenue is less than the minimum amount they would require to sell the good d. marginal revenue equals average revenue e. they can rob consumers of most of their consumer surplus
GDP based on the expenditure approach includes:
a. depreciation, rent, automobile sales, and stock purchases. b. inventory changes, stock dividends, imports, and bank payments to customers. c. consumption, investment, government purchases, and net exports. d. wages, interest, rent, and profits from production.
Firms base decisions on the decisions of other firms in the market in:
A. a monopolistically competitive industry. B. a perfectly competitive industry. C. a monopolistic industry. D. an oligopolistic industry.