Refer to the above figure. Suppose the current aggregate demand is represented by AD2. If aggregate demand falls to line AD3, then
A) the new equilibrium will be at j.
B) the new equilibrium will be at k.
C) the new equilibrium real Gross Domestic Product (GDP) will be x.
D) a new price level will be established at a.
C
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In 1971 money market mutual funds were introduced as an alternative to
A) commercial paper. B) Treasury bills. C) repurchase agreements. D) bank deposits.
According to the permanent income hypothesis, the impact of ________
A) a change in permanent income on consumption is greater than the impact resulting from a change in transitory income B) a change in transitory income on consumption is greater than the impact resulting from a change in permanent income C) a change in transitory income is felt primarily through changes in the total tax revenue paid to the federal government D) a change in permanent income on consumption is larger than the impact resulting from a change in future income