Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:

If foreign holdings of U.S. dollars increase, holding all else constant,

A) the balance on the U.S. current account will increase. B) the balance on the U.S. capital account will increase. C) the U.S. balance of trade will increase. D) the balance on the U.S. financial account will increase.

Suppose the government cuts taxes by $300 million dollars this year and must pay off its debt next year by increasing taxes by $300 million

According to Ricardian equivalence, consumption spending will ________ this year and ________ next year, all else equal. A) increase by $300 million; decrease by $300 million B) increase by $150 million; decrease by $150 million C) increase by $300 million; not change D) not change; not change