After government purchases are reduced, the planned aggregate expenditure function may shift up because the reduction in output will cause
A) money supply to increase, the interest rate to decrease, and planned investment to increase.
B) money supply to decrease, the interest rate to decrease, and planned investment to increase.
C) money demand to decrease, the interest rate to decrease, and planned investment to increase.
D) money demand to increase, the interest rate to decrease, and planned investment to increase.
Answer: C) money demand to decrease, the interest rate to decrease, and planned investment to increase.
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The idea that all aspects of economic behavior, such as labor supply, saving, and investment, respond to economic incentives, especially tax rates, is known as
A) New Keynesian economics. B) new classical economics. C) tax-structured classical economics. D) supply-side economics.
A nation's market-risk premium rises if:
a. The volatility (e.g., standard deviation) of expected inflation rises. b. The average expected inflation rate rises. c. Security maturities lengthen. d. All of the above.
According to the interest rate effect, as the price level rises,:
A. people feel poorer and buy less. B. United States products become more expensive and foreigners buy less U.S. goods. C. interest rates fall, and people buy less. D. interest rates rise, and people buy less.
Refer to the data. The marginal product of the sixth worker is:
Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.
A. 180 units of output.
B. 30 units of output.
C. 15 units of output.
D. negative.