The Consumer Price Index measures
A. changes in the money supply.
B. changes in all prices.
C. changes in the price of a market basket of consumer goods.
D. changes in the cost of consumer credit.
C. changes in the price of a market basket of consumer goods.
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Firms will invest in new equipment whenever:
A. public saving is greater than private saving. B. the expected cost of the equipment exceeds the expected benefit. C. the expected cost of the equipment is less than the expected benefit. D. the expected cost of the equipment is greater than the value of the marginal product of the equipment.
Other things being equal, a reduction in taxes will
A) lead to a corresponding reduction in interest rates increasing the crowding out effect. B) influence the short run aggregate supply curve but not the aggregate demand curve. C) cause an increase in aggregate demand due to increases in consumption, investment, or net exports. D) lead to a reduction in the long run aggregate supply curve as businesses enjoy greater profits.
If the demand curve for an inferior good is drawn,
A. the curve will generally have a positive slope. B. the curve cannot be drawn; demand curves only exist for normal goods. C. the curve will generally have a negative slope. D. the curve will shift when the price of the good changes.
In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and the expected profit falls, the amount of loanable funds demanded will be
A) less than $450 billion. B) $450 billion. C) between $450 billion and $600 billion. D) greater than $600 billion.