Investment spending
A. cannot be stimulated by decreasing the interest rate.
B. is often the cause of business fluctuations in the United States.
C. is a remarkably stable function of the level of real GDP.
D. is the primary solution to recessions and inflations, according to John Maynard Keynes.
Answer: B
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What are net exports?
A. Exports minus imports B. Exports plus imports C. Imports minus exports D. That portion of consumption and investment goods sent to other countries
In the long run, if inflation is higher in India than in the U.S., one would expect
A. the dollar to depreciate relative to the rupee B. the rupee to depreciate relative to the dollar C. the rupee to appreciate relative to the dollar D. two of the above are correct
If a firm is a price taker, then the demand curve for the firm's product is:
A. Equal to the total revenue curve B. Perfectly inelastic C. Perfectly elastic D. Unit elastic
If a tax cut increases people's labor supply, then the tax cut
A) increases potential GDP. B) decreases aggregate demand. C) decreases potential GDP because the real wage rate falls. D) does not affect aggregate demand. E) Both answers B and C are correct.