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5 Written questions

5 Matching questions

  1. Special interest effect
  2. Supply of Loanable Funds
  3. Paradox of thrift
  4. Ricardian equivalence
  5. Money Demand Curve
  1. 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
  2. b Upward sloping, increasing interest rates will cause people to say no to investing.
  3. c when many people drastically increase their savings and reduce consumption, total savings may decrease
  4. d an issue that generates substantial benefits for a small group by generating minimal costs to a large group.
  5. e belief that a tax reduction financed with government debt will exert no effect on aggregate demand

5 Multiple choice questions

  1. upward sloping because an increase in the price level will improve the profitability of the firms and cause them to increase output
  2. -Movement along the curve due to a change in PRICE of a good
  3. -cause of inflation
    -Not reduce unemployment
    -Not increase output
  4. the belief that changes in the marginal tax rate will exert important effects on aggregate supply
  5. the maximum price consumers are willing to pay for an additional unit

5 True/False questions

  1. 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


  2. Crowding Outreduction in private spending due to higher interest rates generated by a budget deficit financed through government borrowing.


  3. Shifters of Short Run Aggregate Supply-Resource Price
    -Changes in expected inflation
    -Supply Shocks


  4. Frictional Unemploymentunemployment due to recessions and inadequate labor demand


  5. What open market operation decreases the money supply?When the fed sells bonds.


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