Within the AD/AS model, if consumers increase their savings and cut back on their spending, the
a. natural rate of unemployment will increase.
b. real interest rate will decrease and, thereby, cushion the reduction in consumption spending.
c. real interest rate will increase because of the higher rate of saving.
d. long-run aggregate supply will decrease to restore equilibrium.
B
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Which of the following statements is TRUE of static tax analysis?
A) A government receives lower tax revenues by raising the tax rate. B) A government receives higher tax revenues by raising the tax rate. C) A government cannot change it tax revenues by changing the tax rate. D) A change in the tax rate can raise or lower tax revenues, depending on other factors.
Which of the following is an example of a leakage from the circular flow of income and expenditure?
a. Investment b. Imports c. Government purchases d. Exports e. Transfer payments