Consider an initial IS-LM equilibrium with normally-sloped curves. An increase in government spending shifts the ________ by a horizontal distance equal to the change in government spending ________
A) IS curve to the right, divided by the Chapter 3 multiplier
B) IS curve to the right, times the Chapter 3 multiplier
C) IS curve to the left, times the interest rate at the initial equilibrium
D) LM curve to the right, divided by the Chapter 3 multiplier
E) LM curve to the right, divided by the interest rate at the initial equilibrium
B
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The labor force participation rate is equal to
A) (labor force ÷ population) × 100. B) (labor force ÷ working-age population) × 100. C) (number of employed workers ÷ labor force) × 100. D) (number of employed workers ÷ working-age population) × 100. E) (number of employed workers ÷ population) × 100.
The ability of the Federal Reserve to use monetary policy to affect economic variables such as real GDP ultimately depends upon its ability to affect
A) nominal interest rates. B) foreign exchange rates. C) real interest rates. D) tax rates.