5 Written questions
5 Matching questions
- Special interest effect
- Supply of Loanable Funds
- Paradox of thrift
- Ricardian equivalence
- Money Demand Curve
- a indicates the inverse relationship between the interest rate and the quantity of money people want to hold.
-downward sloping because as the interest rate increases, people will hold less money
- b Upward sloping, increasing interest rates will cause people to say no to investing.
- c when many people drastically increase their savings and reduce consumption, total savings may decrease
- d an issue that generates substantial benefits for a small group by generating minimal costs to a large group.
- e belief that a tax reduction financed with government debt will exert no effect on aggregate demand
5 Multiple choice questions
- upward sloping because an increase in the price level will improve the profitability of the firms and cause them to increase output
- -Movement along the curve due to a change in PRICE of a good
- -cause of inflation
-Not reduce unemployment
-Not increase output
- the belief that changes in the marginal tax rate will exert important effects on aggregate supply
- the maximum price consumers are willing to pay for an additional unit
5 True/False questions
Higher Tax Rates → -discourage work and productivity
-High tax rates reduce capital formation
-Encourage people to purchase less desired goods just because they are tax deductible
Crowding Out → reduction in private spending due to higher interest rates generated by a budget deficit financed through government borrowing.
Shifters of Short Run Aggregate Supply → -Resource Price
-Changes in expected inflation
Frictional Unemployment → unemployment due to recessions and inadequate labor demand
What open market operation decreases the money supply? → When the fed sells bonds.