If a country has an expenditure multiplier of 10, the slope of its aggregate planned expenditure (AE) curve is

Investment spending is procyclical. In the short run, are changes in investment affected more by changes in the expected marginal product of capital, or by changes in the user cost of capital?

What will be an ideal response?

Pepsi and pizza are normal goods. When the price of pizza rises, the substitution effect causes Pepsi to be relatively

a. more expensive, so the consumer buys more Pepsi. b. more expensive, so the consumer buys less Pepsi. c. less expensive, so the consumer buys more Pepsi. d. less expensive, so the consumer buys less Pepsi.