If investment decreases by $20 billion and the MPC = 0.8, the resulting decrease in the consumption component of AD is:
a. $16 billion

Which of the following is not a basic monetary policy tool used by the Fed?

A. Deposit insurance B. The reserve requirement C. The discount rate D. The sale and purchase of Treasury bonds

The classically-based models (classical, new classical, monetarist, real business cycle) all agree that

a. markets always clear. b. monetary policy can affect output in the short-run but not the long-run. c. changes in aggregate drive most changes in output. d. stabilization policy is ineffective. e. None of the above