What is the accelerator theory of investment spending?
What will be an ideal response?
The accelerator theory of investment spending says that current investment spending is positively related to the expected real growth of GDP.
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The LM curve illustrates that when income increases, the
A) price level must increase to clear the asset market. B) real interest rate on nonmonetary assets must increase to clear the asset market. C) price level must increase to clear the goods market. D) real interest rate on nonmonetary assets must increase to clear the goods market.
Rationing occurs for goods
A) that have a positive price. B) that have a zero price. C) that have a negative price. D) that are not manufactured.
A judge requires Harry to make a payment to Sally. The judge says that Harry can pay her either $10,000 today or $12,000 two years from today. Of the following interest rates, which is the highest one at which Harry would be better off paying the money today?
a. 4 percent b. 6 percent c. 9 percent d. 11 percent
The idea that creating incentives for individuals and firms to increase productivity leading to an increase in long-run aggregate supply is
A. the Ricardian equivalence theorem. B. supply-side economics. C. demand-side economics. D. laissez-faire economics.