Disposable income equals aggregate income
A) minus saving and minus net taxes.
B) minus saving.
C) minus net taxes.
D) plus net taxes.
E) plus saving minus net taxes.
C
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Explain how a decrease in housing prices may reduce the wealth of some while increasing the wealth of others. What effect would this have on aggregate consumption?
What will be an ideal response?
Assume that the one-year interest rate is on the vertical axis of the IS-LM model and that the yield curve is initially upward sloping. Suppose that financial market participants expect that the central bank will pursue a monetary contraction in the future. Given this information, we would expect which of the following to occur?
A) The yield curve will become steeper. B) The yield curve will become flatter. C) The yield curve will become horizontal. D) The yield curve will become downward sloping.