A decrease in the federal funds rate
A) increases other short-term interest rates, decreases investment, and decreases aggregate demand.
B) lowers the exchange rate, increases the supply of loanable funds, and increases aggregate demand.
C) lowers other sort-term interest rate, raises the real interest rate, and increases aggregate demand.
D) decreases the supply of loanable funds, raises the real interest rate, and decreases aggregate demand.
E) decreases the demand for loanable funds, lowers the real interest rate, and decreases aggregate demand.
B
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Suppose a pickpocket steals your $20 bill and spends all of it on pizza and beer. What happens to GDP?
A) GDP increases by twenty dollars. B) GDP decreases by twenty dollars. C) Because the positive balances out the negative, GDP remains unchanged. D) GDP decreases because somebody has clearly been made worse off.
A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?
A) The price level will fall, and the level of GDP will be unaffected. B) The price level will rise, and the level of GDP will be unaffected. C) The price level will rise, and the level of GDP will fall. D) The price level will fall, and the level of GDP will fall.