In the United States decisions to increase interest rates are made by ________ and decisions to increase taxes are made by ________.
A. Congress; the Federal Reserve
B. the Federal Reserve; the Federal Reserve
C. the Federal Reserve; Congress
D. Congress; Congress
Answer: C
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In the Mundell-Fleming model with perfect capital mobility, the domestic interest rates are determined by
a. monetary policy. b. the IS and LM curves. c. domestic savings and investment. d. budget deficits. e. none of the above.
The marginal propensity to save (MPS) is
A) the rate at which real savings changes over time. B) the percentage of real disposable income saved. C) the difference between the amounts of real disposable income consumed and saved. D) the percentage of an additional dollar of real disposable income that will go toward additional real savings.
Monetarists believe
A) Real GDP is not determined by M in the long run. B) velocity is constant. C) the SRAS curve is vertical. D) a and c E) a, b and c
The long-run aggregate supply curve shifts right at the same time as
A. the production possibilities curve shifts outward. B. the production possibilities curve shifts inward. C. the inflation rate increases. D. wages increase.