Assume the government decides to decrease taxes and to finance the expected budget deficit with borrowing in the real credit market. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the left.
b. Start the analysis in the real goods market with aggregate demand shifting to the right.
c. Start the analysis in the real goods market with aggregate supply shifting to the left.
d. Start the analysis in the real goods market with aggregate supply shifting to the right.
e. Start the analysis in the real credit market with demand for real credit shifting to the right.
Question 2
If you put 500 into a checking account, the immediate effect (do not consider the money multiplier which we will study in the next chapter) is:
a. M1 rises, M2 rises, and the monetary base remains the same.
b. M1, M2, and the monetary base rise.
c. M1, M2, and the monetary base fall.
d. M1, M2, and the monetary base remain the same.
e. M1 rises, M2 falls, and the monetary base remains the same.
This chart illustrates the bottom up assumption about government. In this, attitudes, culture, and
The energy budget
Economic recession in 2008 saw a small decrease in demand
American Government: Roots and Reform, 2009 Edition
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Introduction to Corporate Finance, 5th