In the Keynesian model with government and the foreign sector added, what are the components of spending? Which of these components are autonomous and which are not? How is the equilibrium found?
When the economy is not at an equilibrium, what adjustments are made?
There are four components to spending—consumption, investment, government, and net exports. The last three are autonomous and consumption has an autonomous part to it. However, consumption is also a function of income. Equilibrium is found at the point at which total planned real spending (C + I + G + X) exactly equals real Gross Domestic Product (GDP). When the economy is not at an equilibrium, adjustments are made by unplanned inventory changes.
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What assets are included in M1? In M2? Is all of M1 and M2 money? If some assets of M1 or M2 are not money, why are they included in M1 or M2?
What will be an ideal response?
Between 1820 and 1840 freight rates on western rivers declined drastically. The main reason for this drop in prices was _________
a. the decline in the price level. b. tolls and other barriers to trade decreased. c. the decline in monopoly power. d. the frequent use of the steamboat.