Chapter 10: Macroeconomic objectives (page 196)
What are the main macroeconomic policies used to achieve macroeconomic objectives?
Short Answer
Fiscal, Monetary and Supply Side policies
Chapter 10: Macroeconomic objectives (page 196)
What are the main macroeconomic policies used to achieve macroeconomic objectives?
Fiscal, Monetary and Supply Side policies
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Get started for freeWhich of the following scenarios will shift the investment demand curve right? Select one or more answers from the choices shown.
Business taxes increase.
The expected return on capital increases.
Firms have a lot of unused production capacity.
Firms are planning on increasing their inventories.
Use your completed table for problem 1 to solve this problem. Suppose the wealth effect is such that \(10 changes in wealth produce \)1 changes in consumption at each income level. If real estate prices tumble such that wealth declines by \(80, what will be the new level of consumption and saving at the \)340 billion level of disposable income? The new level of saving?
Level of Output and Income (GDP = DI) | Consumption | Saving | APC | APS | MPC | MPS |
\(240 | \)244 | -$4 | 1.016 | -0.016 | 0.8 | 0.2 |
260 | 260 | 0 | 1 | 0 | 0.8 | 0.2 |
280 | 276 | 4 | 0.985 | 0.014 | 0.8 | 0.2 |
300 | 292 | 8 | 0.973 | 0.026 | 0.8 | 0.2 |
320 | 308 | 12 | 0.962 | 0.037 | 0.8 | 0.2 |
340 | 324 | 16 | 0.952 | 0.047 | 0.8 | 0.2 |
360 | 340 | 20 | 0.944 | 0.055 | 0.8 | 0.2 |
380 | 356 | 24 | 0.936 | 0.063 | 0.8 | 0.2 |
400 | 372 | 28 | 0.93 | 0.07 | 0.8 | 0.2 |
Precisely how do the MPC and the APC differ? How does the MPC differ from the MPS? Why must the sum of the MPC and the MPS equal 1?
Why is investment spending unstable?
Why will a reduction in the real interest rate increase investment spending, other things equal?
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