Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 29, Problem 4MCQ
To determine
To select:
The option that correctly states the effect of increase in expected future income.
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Students have asked these similar questions
An increase in the interest rate should
increase investment spending.
decrease consumption spending.
increase government spending.
increase net exports.
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The interest rate effect. Which sentence is true?
is the change in investment spending and government purchases caused by changes in money demand.
is the change in exports and imports resulting from changes in the interest rate caused by changes in the aggregate price level.
is the change in interest rates caused by changes to government purchases.
is the change in consumer and investment spending due to changes in interest rates resulting from changes in the aggregate price level.
is the change in real GDP caused by the Federal Reserve adjusting target interest rates.
Chapter 29 Solutions
Foundations of Economics (8th Edition)
Ch. 29 - Prob. 1SPPACh. 29 - Prob. 2SPPACh. 29 - Prob. 3SPPACh. 29 - Prob. 4SPPACh. 29 - Prob. 5SPPACh. 29 - Prob. 6SPPACh. 29 - Prob. 7SPPACh. 29 - Prob. 8SPPACh. 29 - Prob. 9SPPACh. 29 - Prob. 10SPPA
Ch. 29 - Prob. 11SPPACh. 29 - Prob. 1IAPACh. 29 - Prob. 2IAPACh. 29 - Prob. 3IAPACh. 29 - Prob. 4IAPACh. 29 - Prob. 5IAPACh. 29 - Prob. 6IAPACh. 29 - Prob. 7IAPACh. 29 - Prob. 8IAPACh. 29 - Prob. 9IAPACh. 29 - Prob. 10IAPACh. 29 - Prob. 1MCQCh. 29 - Prob. 2MCQCh. 29 - Prob. 3MCQCh. 29 - Prob. 4MCQCh. 29 - Prob. 5MCQCh. 29 - Prob. 6MCQCh. 29 - Prob. 7MCQ
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- Even during a financial recession, consumers tend to increase spending in _______arrow_forwardAll of the following are reasons that spending on durable goods is volatile except durable goods are long-lived. good substitutes exist for durable goods. high prices make durable goods risky purchases. the purchase of durable goods is not affected by interest rates.arrow_forwardIf all of the households and businesses in the economy start saving more during economic hard times, then aggregate income will fall, hurting everyone in the economy. This is known as: A) the quantity theory. B) the crowding-out theory. C) the paradox of thrift. D) the permanent income hypothesisarrow_forward
- Explain how an increase in government expenditure can affect the goods market and moneymarket by taking the link between the two markets into account.arrow_forwardWhich of the following explain why the Aggregate Demand Curve slopes downward? Mark all that apply. Select 4 correct answer(s) Question 10 options: When the price level rises, the interest rate will rise, reducing Investment Spending. When the price level falls, the interest rate will fall, increasing Investment Spending. When the price level rises, the purchasing power of money declines and Consumption Spending will decline. When the price level falls, the purchasing power of money declines and Consumption Spending will decline. When the domestic price level rises, imports become relatively more expensive and Net Exports increase. When the domestic price level falls, imports become relatively more expensive and exports become less expensive, resulting in an increase in Net Exports.arrow_forwardA reduction in the money supply will lead to A fall in the rate of interest and an increase in investment expenditure. A rise in the rate of interest and an increase in investment expenditure. A fall in the rate of interest and a decrease in the investment expenditure. A rise in the rate of interest and a decrease in investment expenditure.arrow_forward
- Consumers of a country spend 83.21% of their disposable income. If the government wants to increase national income by $1,521.97 Trillion, how much should taxes need to change by? Make sure to include a negative sign for negative values. Round your answer to the nearest two decimal place. Write your answer in billions of dollars so if your answer is 10 billion, write 10.arrow_forwardAn increase in households’ desired money holding causes an increase in interest rates. How does this affect investment spending and aggregate demand?arrow_forwardAggregate consumption will certainly increase if Group of answer choices income increases and wealth decreases. interest rates increase and consumer confidence about the future strengthens. income increases and interest rates decrease. interest rates increase and household wealth increases.arrow_forward
- Investment spending expansion O Declines; increases O Declines; declines Increases; increases O Increases; decline during an recession and during anarrow_forwardmacan leaming What type of spending depends primarily on these three factors: the interest rate, the expected future level of real GDP, and the current level of production capacity? DOOO Planned investment spending Actual consumer spending Unplanned inventory investment Actual investment spendingarrow_forwardGovernment Spending and How it Affects Aggregate Demandarrow_forward
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