In a certain economy, the components of aggregate spending are given by: C = 100 + 0.9(Y - T) - 500rI = 150 - 1,000rG = 200NX = 50T = 100 Given the information about the economy above, what would be the impact on short-run equilibrium output of a one-percentage-point decrease in the real interest rate from 6 percent to 5 percent?
A. Short-run equilibrium output would decrease by 150 units.
B. Short-run equilibrium output would increase by 150 units.
C. Short-run equilibrium output would decrease by 1,500 units.
D. Short-run equilibrium output would increase by 15 units.
Answer: B
You might also like to view...
The Colorado Ski Shop sold 60 ski jackets to a Belgian company's headquarters located in Paris, France. The ski jackets are a
A) U.S. export good. B) capital good. C) government good. D) U.S. consumption service. E) U.S. import.
Income tax collections:
a. fall during periods of prosperity, thus increase federal budget deficits. b. rise during periods of prosperity, thus reduce federal budget deficits. c. fall during recessions, thus increase the problem of unemployment. d. rise during recessions, thus increase the problem of unemployment.
In the short run, at least one factor of production is fixed. This implies that beyond some level of output a firm will:
A. "learn by doing." B. experience diminishing marginal returns. C. experience increasing marginal returns. D. have a U-shaped long-run average cost curve.
What is a subgame?
A) It is a simultaneous game embedded in a sequential game. B) It is one that starts at the final decision node of the tree. C) It is one that begins at any decision node of the tree except the first decision node. D) It is one that begins at any node of the tree, including the game itself.