Assume the marginal propensity to consume (MPC) is 0.75 and the government cuts taxes by $250 billion. The aggregate demand curve will shift to the:
a. right by $1,000 billion.
b. right by $750 billion.
c. left by $1,000 billion.
d. left by $750 billion.
b
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Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and current international transactions balance in the context of the Three-Sector-Model? a. Real GDP falls and current international transactions balance becomes
more negative (or less positive). b. Real GDP rises and current international transactions balance becomes more negative (or less positive). c. Real GDP and current international transactions balance remain the same. d. Real GDP rises and current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.