Easy monetary policy and tight fiscal policy lead to
A) high real interest rates.
B) low real interest rates.
C) roughly unchanged real interest rates.
D) roughly unchanged real interest rates only when Ricardian equivalence holds; otherwise, low real interest rates.
B
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A lower price level causes the C + I + G + X curve to shift as a result of a change in all the following EXCEPT
A) an increase in real wealth. B) an increase in foreign spending on domestic goods. C) an increase in aggregate supply. D) a decrease in interest rates.
Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli. If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch, then
A) the CPI decreases. B) the CPI does not change. C) the CPI increases. D) the CPI might increase or decrease depending how the quantities are affected by the price changes. E) There is not enough information to answer this question.