If the economy is on the IS curve, but is to the right of the LM curve, aggregate output will ________ and the interest rate will ________
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
C
You might also like to view...
Monopoly firms manage to earn positive profits, even in the long run because
a. they have no close substitutes b. there are high barriers of entry to the market c. they have a cost advantage difficult to duplicate d. all of the above
Macroeconomics is converging with microeconomics because
A) macroeconomic relationships depend on microeconomic behavior. B) macroeconomics studies total output. C) government deficits and unemployment go together. D) inflation means a general increase in prices. E) microeconomic theories are easily testable whereas macroeconomic theories are difficult to test.
Prices usually allocate resources efficiently because they allocate
A. consumption to the highest cost of good or service.
B. resources to the lowest value good or service.
C. consumption to the lowest value good or service.
D. resources to the highest value good or service.
A useful economic model
A. deals only with possibilities that actually occurred. B. makes only realistic assumptions. C. may make some unrealistic assumptions in order to simplify a complex reality. D. will avoid conclusions that have public policy implications, because economists do not make value judgments.