Author Question: Refer to Figure 29-1. Suppose that the U.S. government deficit decreases, causing interest rates in ... (Read 122 times)

audie · **on:** Jun 29, 2018

Refer to Figure 29-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?

A) Demand would increase and the economy moves from A to B.
B) Demand would decrease and the economy moves from B to A.
C) Supply would increase, demand would increase and the economy moves from D to A to B.
D) Supply would decrease, demand would increase and the economy moves from A to D to C.

Question 2

An increase in aggregate expenditure has what result on equilibrium GDP?

A) Equilibrium GDP falls.
B) Equilibrium GDP rises.
C) Equilibrium GDP is not affected by an increase in aggregate expenditure.
D) Equilibrium GDP may rise or fall depending on the size of the increase in aggregate expenditure relative to the initial level of GDP.