At the time of Elise's 20 year high school reunion she was earning $50,000 and the CPI was 80. Now that it is time for her to attend her 25 year high school reunion, Elise's income has risen to $80,000 and the CPI is 150. At her 25 year reunion, can Elise rightfully brag that her real income has risen since the last time she saw her former classmates five years ago?
A) Yes, Elise's real income rose during that 5 year period.
B) No, Elise's real income fell during that 5 year period.
C) No, Elise's real income remained constant during that 5 year period.
D) It is impossible to determine what happened to Elise's real income.
B
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Use the following graph to answer the next question.
Which line represents the long-run aggregate supply curve?
A. 1 B. 2 C. 3 D. 4
The initial impact of the repeal of an investment tax credit is to shift
a. aggregate demand right. b. aggregate demand left. c. aggregate supply right. d. aggregate supply left.
Lowering the discount rate is
A) a contractionary policy stance because the cost of borrowing funds falls, thereby encouraging consumption and investment spending. B) a contractionary policy because it reduces banks' profit margins by lowering the return on lending. C) an expansionary policy stance because consumers and businesses can now borrow funds directly from the Fed at a lower cost, thereby encouraging private spending. D) an expansionary policy stance because it will be less costly for banks to borrow funds and this puts downward pressure on interest rates in the economy.
Part of the normal aftermath of a period of excessive aggregate demand is
A. improvement in the quality of life. B. reflation. C. real GDP growth. D. stagflation. E. All of these responses are correct.