If the United States cuts its government budget deficit, what impact would there be on the IS curve?
A) It would shift right due to higher levels of total spending.
B) It would shift left due to lower levels of total spending.
C) It would shift left because of lower levels of total spending, and it would shift right if U.S. interest rates decline due to lower borrowing.
D) It would shift left because of higher nominal and real interest rates due to increased borrowing.
Ans: C) It would shift left because of lower levels of total spending, and it would shift right if U.S. interest rates decline due to lower borrowing.
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A company’s ability to pay its debts is measured by:
A. solvency tests. B. profitability tests. C. profitability ratio. D. liquidity ratio.
Keynesian macroeconomists argue that the short-run Phillips curve ________ represent a usable trade-off for policymakers because ________
A) does; prices are sticky B) does; prices are not sticky C) does not; prices are not sticky D) does not; prices are sticky