There are two universities, A and B, in a city. Tuition rises at University A and, as a result, the demand for attending University B rises. It follows that educational services at the two universities are
A) complements.
B) normal goods.
C) inferior goods.
D) substitutes.
E) none of the above
D
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Relative to GDP, interest on the national debt
a. has grown at a steady rate during the last 40 years b. has remained constant in recent decades c. grew especially rapidly during the 1980s d. declined slightly during the 1980s e. fluctuates as retirement portfolios change their allocation of government securities
If the government increases the income tax rate, consumers have:
A. less to spend and will reduce their consumption. B. more to spend and will increase their consumption. C. more to spend and will reduce their consumption. D. less to spend and will increase their consumption.
The equation of exchange can be written as
A. velocity × nominal GDP = price index. B. real GDP × price index = money supply. C. money supply × price index = real GDP. D. money supply × velocity = nominal GDP.
(a)Draw a figure, using the Keynesian IS-LM framework, of an economy in recession.(b)Now suppose the IS curve shifts up and to the right far enough that if the real interest rate is unchanged, output will increase beyond full employment. If the Fed's goal is to move output to its full-employment level, what must happen to the real interest rate? What is the effect on the price level? (c)Suppose, before the Fed can act, that the government announces a restrictive fiscal policy, shifting the IS curve down and to the left relative to its position in part (b) What is the Fed likely to do (relative to what it would do if fiscal policy wasn't restrictive) if its goal is to target full-employment output? What happens to the real interest rate relative to what it is in part (b)?
What will be an ideal response?