When does a shortage occur?
What will be an ideal response?
A shortage occurs when the price is below the equilibrium price. When the price is less than the equilibrium price, the quantity demanded is greater than the quantity supplied.
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Which of the following would cause the money demand curve to shift to the left?
A) a decrease in real GDP B) an increase in the interest rate C) an increase in the price level D) an open market purchase of Treasury securities by the Federal Reserve
Private savings and thus investment could be increased by which of the following government policies, ceteris paribus?
A) elimination of the corporate income tax B) allowing corporations to use "replacement cost accounting" C) exemption of interest earnings from income taxation D) all of the above.