According to the traditional Keynesian school of thought, expansionary fiscal and monetary policy will:
a. increase interest rates, thereby shifting the investment function to the right.
b. reduce both consumption and investment spending, thereby eliminating all inflationarypressures
c. reduce investment spending, thereby stabilizing the aggregate supply shocks.
d. stimulate both consumption and investment spending, thereby increasingaggregate demand.
e. shift the aggregate demand curve to the left, thereby reducing the unemployment rate.
d
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The ratio of the change in GDP to an initial change in aggregate spending is the:
a. spending multiplier. b. permanent income rate. c. marginal expenditure rate. d. marginal propensity to consume.
The relationship between the level of income and investment spending is known as the consumption function.
Answer the following statement true (T) or false (F)
Building infrastructure is referred to as
A. social overhead capital. B. human capital. C. physical capital. D. financial capital.
If the rate of inflation overseas falls relative to the rate of inflation in the United States, U.S. net exports will tend to ____, causing the exchange value of the U.S. dollar to ____
a. rise; rise b. rise; fall c. fall; rise d. fall; fall