The circular flow model shows the relationships between
A. government and business firms.
B. government and households.
C. households and business firms.
C. households and business firms.
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If s denotes savings rate, I denotes aggregate investment, and Y denotes GDP, then which of the following equations is correct?
A) I = s × Y B) I =s/Y C) I = Y/s D) Y = s × I
According to real business cycle theory, an increase in financial frictions might lead to ________, if ________
A) a decrease in output; the rise in the credit spread causes a leftward shift of aggregate demand B) a decrease in inflation; the disruption of capital markets results in a leftward shift of long-run aggregate supply C) a decrease in output; the disruption of capital markets results in a leftward shift of long-run aggregate supply D) a decrease in output; a decline in expected output causes a leftward shift of aggregate demand