In the long-run ISLM model and with everything else held constant, the long-run effect of an expansionary monetary policy is to
A) increase real output and the interest rate.
B) not change either real output or the interest rate.
C) increase real output and leave the interest rate unchanged.
D) increase the interest rate and leave real output unchanged.
B
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If government spending is held constant and Ricardian equivalence holds,
A) an increase in the government budget deficit is always matched by a reduction in private savings. B) an increase in government savings is always matched by an increase in the government budget deficit. C) an increase in government savings is always matched by an equal increase in private savings. D) an increase in government savings is always matched by an equal reduction in private savings.
If disposable income is $900 billion when the average propensity to consume is 0.9, it can be concluded that:
A. The marginal propensity to consume is also 0.9 B. The marginal propensity to save is 0.1 C. Consumption is $900 billion D. Saving is $90 billion