Along the 45-degree reference line
A) total planned real expenditures = real GDP.
B) total planned real expenditures = planned nominal expenditures.
C) total planned nominal expenditures = consumption.
D) total planned investment spending = planned real expenditures.
Ans: A) total planned real expenditures = real GDP.
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Consider a downward-sloping demand curve. When the price of a normal good decreases, the income and substitution effects
A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work in opposite directions and quantity demanded increases. D) work in opposite directions and quantity demanded decreases.
If a bank grants you a mortgage, the mortgage is
A) an asset to you as well as an asset to the bank. B) an asset to you, but a liability to the bank. C) a liability to you, but an asset to the bank. D) a liability to you as well as a liability to the bank.