What is wrong (if anything) with each of the followingstatements?a. “In the 'Intermediate Run' an increase in the realinterest rate leads to a reduction in Investment andan increase in Consumption."5. "Because of the Classical Dichotomy, the monetaryconditions in the nominal side of the economy have adirect impact on conditions in the real side of theeconomy."c. "In the 'Intermediate Run', the aggregate supplycurve is upward sloping."d. "In the 'Intermediate Run' model, an increase (arightward shift) in the 'IS' curve will lead to anincrease in output and an increase in the real interestrat"e. "In the 'Intermediate Run' model, an increase in thetechnology parameter (A†) will lead to increasedemployment, an expansion of output, and anincrease in the real interest rate."f. "In the 'Intermediate Run' model, an increase ingovernment expenditures will lead to a permanentexpansion in output."g. "Ricardian Equivalence suggests that households caninfer an increase in federal government spendingthat is financed by borrowing will not lead to a futureincrease in their tax liabilities."

Answered: "In the 'Intermediate Run' an increase…

"In the 'Intermediate Run' an increase in the real interest rate leads to a reduction in Investment and an increase in Consumption."

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

What is wrong (if anything) with each of the following
statements?
a. “In the 'Intermediate Run' an increase in the real
interest rate leads to a reduction in Investment and
an increase in Consumption."
5. "Because of the Classical Dichotomy, the monetary
conditions in the nominal side of the economy have a
direct impact on conditions in the real side of the
economy."
c. "In the 'Intermediate Run', the aggregate supply
curve is upward sloping."
d. "In the 'Intermediate Run' model, an increase (a
rightward shift) in the 'IS' curve will lead to an
increase in output and an increase in the real interest
rat"
e. "In the 'Intermediate Run' model, an increase in the
technology parameter (A†) will lead to increased
employment, an expansion of output, and an
increase in the real interest rate."
f. "In the 'Intermediate Run' model, an increase in
government expenditures will lead to a permanent
expansion in output."
g. "Ricardian Equivalence suggests that households can
infer an increase in federal government spending
that is financed by borrowing will not lead to a future
increase in their tax liabilities."

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