In an economy, the government wants to decrease aggregate demand by $48 billion at each price level to decrease real GDP and control demand-pull inflation. If the MPC is 0.75, then it could
A. increase taxes by $24 billion.
B. decrease government purchases by $16 billion.
C. decrease government purchases by $10 billion.
D. increase taxes by $16 billion.
Answer: D
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One suggested method of reducing excessive risk-taking by SIFIs is to require them to hold ________ capital when credit is expanding rapidly and ________ capital when credit is contracting
A) less; more B) more; no C) more; less D) less; no
Other things the same, a decrease in the U.S. interest rate
a. induces firms to invest more. b. shifts money demand to the left. c. makes the U.S. dollar appreciate. d. increases the opportunity cost of holding dollars.
Changes in aggregate spending not caused by changes in output or the inflation rate, also known as exogenous changes in spending, will shift the:
A. potential output line. B. aggregate demand curve. C. short-run aggregate supply curve. D. long-run aggregate supply curve.
There is a positive relationship between two variables if:
A. they move in opposite directions. B. they move in the same direction. C. one variable changes and the other does not. D. neither variable moves.