As real GDP falls, A. money demand falls, so the interest rate falls. B. money d
ID: 1215872 • Letter: A
Question
As real GDP falls, A. money demand falls, so the interest rate falls. B. money demand falls, so the interest rate rises. C. money demand rises, so the interest rate falls D. money demand rises, so the interest rate rises. 48. Assume the MPC is 0.65. Assuming only the multiplier effect matters, a decrease in government purchases of $20 billion will shift the aggregate demand curve to the A. left by about $30.77 billion. B. right by about $57.1 billion. C. left by about $57.1 billion. D. right by about $30.77 billion. 49. Suppose the MPC is 0.60. Assume there are no crowding out or investment accelerator effects. If the government increases expenditures by $200 billion, then by how much does aggregate demand shift to the right? If the government decreases taxes by $200 billion, then by how much does aggregate demand shift to the night? A. $300 billion and $300 billion B. $300 billion and $180 billion C. $500 billion and $300 billion D. $500 billion and $500 billion 50. Suppose that reducing inflation by 2 percentage points would cost a country 5 percent of its annual output. This country's sacrifice ratio is A. 0.4. B. 1.5. C. 2.5. D. 5.0.Explanation / Answer
47. B is correct
48.C is correct. (1/1-c) * 20 = 57.1
49. D is correct. ( 1/1-c) * 200 = 500 for both .
50.option number C is correct. 5 %/2 %
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