In the Keynesian model, suppose the Fed sets a target for the real interest rate
If the IS curve shifts down and to the left, and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run, what should the Fed do? Use the LR curve to formulate your answer.
Reduce the real interest rate by shifting the LR curve down.
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If demand falls, what happens to equilibrium price and quantity?
What will be an ideal response?
If Real GDP was $8,742 billion in year 2 and it had been $8,509 billion in year 1, what was the approximate economic growth rate during this time period?
A) 9.73 percent B) 2.67 percent C) 3.58 percent D) 2.74 percent
Use the figure below to answer the following question.
The diagram shows three supply curves for cars today. Which of the following would cause the supply of cars to shift from S1 to S2?
A. an increase in the price of cars in the market B. a decrease in the number of car producers C. expectations of higher car prices in the future D. expectations of lower car prices in the future
A school bookstore tried to engage in price discrimination by selling novels to students and faculty for different prices. Its strategy was to increase prices to faculty and decrease prices to students. What is the most likely reason that this strategy failed?
A. Novels are sold in a competitive market. B. There was nothing to prevent students from purchasing novels and reselling them to faculty. C. Everyone had inelastic demand for novels. D. There was no easy way to distinguish the students from the faculty.