If the interest rate is 4 percent per year and you borrow $100 for one year, at the end of the year you must pay back

For each of the following changes, identify whether there will be a shift in the IS curve or a movement along the IS curve. In each case identify the direction of the movement or shift

a. The real interest rate decreases. b. The government decreases tax rates. c. Government spending decreases. d. Investors become optimistic about future profitability.

In which of the following situations is cheating on a collusive agreement is most likely?

a. Prices are publicly posted. b. There are few sellers in the market. c. The market demand curve is elastic. d. There are economies of scale. e. Prices are difficult for competitors to observe.