Everything else held constant, a decrease in planned investment expenditure ________ aggregate ________
A) increases; demand
B) decreases; demand
C) decreases; supply
D) increases; supply
B
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When the Fed purchases government securities,
A) required reserves in the banking system decrease, leading to fewer loans being made. B) required reserves in the banking system increase, leading to more loans being made. C) the monetary base does not change. D) excess reserves in the banking system decrease, leading to fewer loans being made. E) excess reserves in the banking system increase, leading to more loans being made.
Which of the following statements concerning Keynesian ISLM analysis is TRUE?
A) For a given change in taxes, the IS curve will shift less than for an equal change in government spending. B) Changes in net exports arising from a change in interest rates causes a shift in the IS curve. C) A fall in the money supply shifts the LM curve to the right. D) Expansionary fiscal policy will cause the interest rate to fall.
The one main difficulty with a nominal GDP target rule for monetary policy is that it
A) is a difficult target to hit. B) provides no nominal anchor. C) requires a painful extinguishing response to an adverse supply shock. D) performs badly when there is unstable velocity.
If the production possibilities frontier is linear, then
A) opportunity costs are decreasing as more of one good is produced. B) it is easy to efficiently produce output. C) opportunity costs are increasing as more of one good is produced. D) opportunity costs are constant as more of one good is produced.