The IS curve shifts when all of the following variables change except
a. tax rates.
b. interest rates.
c. government spending.
d. the marginal propensity to consume.
e. both b and d.
B
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Which of the following is a difference between a monopolistically competitive market and a monopoly in the long run?
A) Firms in a monopolistically competitive market earn zero economic profits in the long run, while a monopolist usually earns positive economic profits in the long run. B) Firms in a monopolistically competitive market earn zero economic profits in the long run, while a monopolist incurs losses in the long run. C) Firms in a monopolistically competitive market charge a price higher than marginal cost in the long run, while a monopolist charges a price equal to marginal cost in the long run. D) Firms in a monopolistically competitive market charge a price lower than marginal cost in the long run, while a monopolist charges a price equal to marginal cost in the long run.
Following a decrease in government spending, as the price level falls we would expect the level of interest rates to ________ and investment to ________
A) decrease; increase B) increase; decrease C) decrease; decrease D) increase; increase