Author Question: Which of the following events would likely cause the largest increase in current consumption? A) ... (Read 81 times)

123654777 · **on:** Jun 30, 2018

Which of the following events would likely cause the largest increase in current consumption?

A) a permanent increase in annual salary of 2000
B) a one-time tax cut of 4000
C) a one-time increase in income (e.g. a bonus) of 4000
D) both B and C

Question 2

For a given nominal interest rate, a reduction in expected inflation will cause

A) a reduction in the real interest rate.
B) an increase in the real interest rate.
C) an increase in investment.
D) an increase in money demand.