In the four-part diagram used to construct the IS curve, a lower interest rate
A) has no effect on Y.
B) has no effect on the position of the demand for autonomous planned spending curve.
C) has no effect on the position of the IS curve.
D) none of the above.
C
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The concept of price elasticity of demand measures the
A. number of buyers in a market. B. slope of the demand curve. C. extent to which the demand curve shifts as the result of a price decline. D. sensitivity of consumer purchases to price changes.
If aggregate expenditure is less than GDP, how will the economy reach macroeconomic equilibrium?
A) Inventories will decline, and GDP and employment will decline. B) Inventories will rise, and GDP and employment will rise. C) Inventories will decline, and GDP and employment will rise. D) Inventories will rise, and GDP and employment will decline.
Until Congress began to periodically raise benefit levels to adjust for inflation, the first recipients of Social Security checks:
A. lost value over time, because the payments were not adjusted for inflation. B. received a fixed amount that caused their real income to decline. C. grew poorer over time, because the payments were nominal amounts. D. All of these statements are true.
The cyclical surplus is $450 billion, potential output is $10 trillion and tax rate is 15 percent. With this information, we can infer that the actual output of this economy is:
A. $13.5 trillion. B. $6.5 trillion. C. $6 trillion. D. $13 trillion.