Explain what factors cause shifts and changes in the slope of the ZZ curve presented in chapter 3
What will be an ideal response?
The ZZ curve is upward sloping. The ZZ curve illustrates the level of demand at each level of income. As Y increases, households consume more causing an increase in demand. So, as Y rises, so does demand. The marginal propensity to consume will determine the size of the slope. The ZZ curve will shift when any autonomous component of demand changes. This will include changes in T, G, I and c0.
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In general, as productivity levels increase, the potential for productivity growth
a. decreases. b. increases. c. remains the same. d. increases if GDP increases.
The Fed sells a U.S. government security and a bank dealer writes a check for the amount. When the check clears
A. reserves increase by the amount of the check because the Fed clears the check by increasing the amount of the bank's deposits with the Fed. B. reserves remain unchanged because the decrease of reserves at the dealer's bank is offset by an increase in the reserves at the Fed. C. reserves have fallen by the amount of the reserves times the reserve ratio, and the money supply falls by the difference between the amount of the check and the fall in the reserves. D. reserves have fallen by the amount of the check because the Fed clears the check by reducing the bank's deposits at the Fed.