Graphically illustrate and explain what effect an increase in real income will have on the money market
What will be an ideal response?
An increase in income will cause an increase in transactions and an increase in money demand. The money demand curve will shift to the right causing an excess demand for money and excess demand for bonds. The interest rate will rise to restore money market equilibrium. There is no change in money supply as a result of this.
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In the long run,
a. a larger budget deficit means a larger money supply b. lower investment spending means slower growth of the standard of living c. a larger budget deficit means lower consumption spending d. a larger budget surplus means a smaller capital stock e. government spending has no effect on the budget deficit or surplus
Refer to the information provided in Figure 15.5 below to answer the question(s) that follow. 
Figure 15.5 Refer to Figure 15.5. Assume The Custom Sweater Shop has fixed costs of $350 and is a monopolistically competitive firm. To maximize profits in the short run, this firm should produce ________ personalized sweaters.
A. 0 B. 50 C. 100 D. 75