The equilibrium level of real GDP is $1,000 . the target level of real GDP is $1,250, and the marginal propensity to consume (MPC) is 0.60 . The target can be reached if government spending is:

Purchases of inventories by

A) firms are not counted in investment spending. B) firms are also counted in investment spending. C) households are also counted in investment spending. D) households and Firms are also counted in investment spending. E) foreign consumers are counter in investment spending.

Refer to Figure 14.1. Other things equal, an increase in the inflation rate is best represented as a movement from

A) point A to point B. B) point C to point A. C) point C to point B. D) point B to point C.