Assume the government decides to reduce spending in order to reduce the budget deficit, which it financed by borrowing in the real credit market. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the right.
b. Start the analysis in the real goods market with aggregate supply shifting to the left.
c. Start the analysis in the real goods market with aggregate supply shifting to the right.
d. Start the analysis in the real credit market with demand for real credit shifting to the left.
e. Start the analysis in the real credit market with demand for real credit shifting to the right.
.D
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The macroeconomic conditions during the mid-1990s confounded many economists because of the simultaneous occurrence of
a. low unemployment and decreasing inflation rates. b. low unemployment and increasing budget deficits. c. low unemployment and increasing interest rates. d. high unemployment and increasing inflation rates.
The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts.
The maximum number of skirts that Becky can make in a day is represented by point:
A. V B. Z C. U D. T