Which of the following explains why the AD curve is downward sloping?
a. a lower price level forces the government to reduce taxes, shifting the IS curve to the right and increasing income.
b. A lower price level forces the central bank to increase the money supply, shifting the LM curve to the right and increasing income.
c. A lower price level increases real money balances, shifting the LM curve to the right and increasing income.
d. none of the above are correct.
C
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Assume that the supply curve for a commodity shifts to the left and the demand curve shifts to the right, both by the same degree. Then, in comparison to the initial equilibrium, the new equilibrium will be characterized by:
A) a lower price and the same quantity. B) the same price and quantity. C) a lower price and quantity. D) a higher price and the same quantity.
Assume an asset has a 50 percent probability of yielding 10 percent and an equal probability of yielding 6 percent. The standard deviation for this asset is
A) 10 percent. B) 8 percent. C) 6 percent. D) 2 percent.