For each of the following changes, identify whether there will be a shift in the IS curve or a movement along the IS curve. In each case identify the direction of the movement or shift
a. The real interest rate decreases.
b. The government decreases tax rates.
c. Government spending decreases.
d. Investors become optimistic about future profitability.
a. A decrease in the real interest rate causes a movement down the IS curve.
b. A decreases in taxes will shift the IS curve to the right.
c. A decrease in government spending will shift the IS curve to the left.
d. More optimistic investors will cause the IS curve to shift to the right.
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Assume that the M1 multiplier is 3 and the Federal Reserve sells $100 million worth of government securities. Bank reserves will
A) rise by $100 million. B) fall by $100 million. C) fall by $300 million. D) fall by $33.33 million.
Refer to Scenario 10.2. Suppose that a tax of $5 for each unit produced is imposed by state government. How much profit does the monopolist earn?
A) $4050 B) $4950 C) $450 D) $5
The beginning point of a graph (the 0,0 point) is known as: a. ground zero. b. the quadrant. c. the origin
d. variable one.
Demand for low budget items, such as candy, is generally ________ than demand for large budget items, such as automobiles.
A. higher B. lower C. more elastic D. less elastic