Author Question: Consider the two graphs above. Suppose there is an increase in the real interest rate. This would ... (Read 23 times)

tiffannnnyyyyyy · **on:** Jun 30, 2018

Consider the two graphs above. Suppose there is an increase in the real interest rate. This would ________ the desired level of the capital stock, as depicted in graph ________.

A) increase; B
B) increase; A
C) decrease; B
D) decrease; A

Question 2

The standard IS curve is adjusted in new Keynesian theory to account for ________.

A) the forward-looking behavior of households and firms
B) the difference between real and nominal variables
C) changes in GDP, or Gross Domestic Product
D) the impact of a rising national debt