If the U.S. economy adds to the capital stock, this may require a temporary decrease in the amount of present consumption.

Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from

A) C to B. B) A to E. C) D to C. D) C to D. E) E to A.

When drawn against current income, the slope of the Cd (r) + Id (r) + G curve is equal to the marginal

A) product of capital. B) product of labor. C) propensity to consume. D) propensity to save.