Suppose there is a fiscal contraction. Which of the following is a complete list of the variables that must decrease?
A) consumption
B) consumption and investment
C) consumption and output
D) consumption, output and the interest rate
E) consumption, output and investment
C
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Which of the following exist(s) in a command economy but not in a market economy?
a. Property rights for individuals b. Land, labor, capital, and entrepreneurship c. Plenty of incentives to motivates firms to produce what consumers need d. An absence of long lines of customers at shops e. A central authority making production and consumption decisions
In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. Suppose that a combination of fiscal stimulus and recovery of consumer and business confidence shifts the IS and AD curves, as shown in the figure
The equilibrium real interest rate is ________ percent. A) 3 B) one C) 2.5 D) 2 E) zero