ECON 144 Final Exam

If you believe you can exactly fill a gap between current GDP of $17.5 trillion and potential GDP of $19 trillion with a tax cut of $1 trillion, what must be the value of MPS and what must be the value of the tax multiplier?

.6; 1.5

Keep in mind the formula for the multiplier as you answer this question. Assume that an initial injection of $750 billion dollars into the economy ultimately increases GDP from $17 trillion to $20 trillion. For this to happen, what would the value of MPC have to be? What would the value of the multiplier be?

.75; 4

If the nominal interest rate on a mortgage is 4.2% and inflation is the current annual measure of inflation as reported in the CPI, what is the real interest rate on that same mortgage?

1.7%

What is the current rate at which the U.S. is growing?

1.9%

As discussed in lecture, what is the current reserve requirement for a bank that had exactly $200 million in assets?

10%

What is our current debt-to-GDP ratio?

105%

As discussed in class, what is actual current value of the GDP deflator?

112.2

What is the current base year for the U.S. GDP calculation?

2009

As discussed in lecture, what is the current reserve requirement for a bank that had exactly $100 million in assets?

3%

What percentage of the ARRA was made up of tax cuts? What percentage was made up of government spending?

37%; 63%

What was the name of the index, discussed in lecture, created by Dr. Alberto Cavallo from MIT that tracks changes in 5 million online prices every day?

Billion Prices Project

List four ways that the CPI differs from the GDP Deflator.

Bureau (BEA vs. BLS), Base year (2009 vs. 1983), Quantity doesn't affect GDP, Quarterly vs. Monthly

What is the name of the organization that calculates GDP?

Bureau of Economic Analysis

As discussed in your text and in lecture, what is the term for taking a bunch of financial assets like mortgages and bundling them together to create a new investment instrument?

securitization

What is the definition of GDP, as discussed in lecture?

the total market value of all final goods and services produced in a country during a given period of time (usually a year)

What is the term, discussed in your textbook, for government payments such as unemployment checks and social security payments for which the government receives no goods or services in return?

transfer payments

In our discussion of the government's budget in class, on the expenditure side, what were the two largest categories?

transfer payments; defense

What are the five components of GDP when it is calculated using the "Income Added" approach?

wages, profits, rent, interest

As discussed in lecture, what is the current value of M2? (Be sure to designate millions, billions, trillions, etc.)

$13.35 trillion

What is the current value of Real GDP in the U.S.?

$16.8 trillion

Approximately how much debt (in dollars) do we owe other countries?

$6.3 trillion

*Assume that prices in all other countries are increasing, while prices of U.S. goods are not. Based on our discussion of AE, this would cause... a. NX to decrease, which would ultimately move AD to the left b. NX to increase, which would ultimately move AD to the right c. NX to increase, which would ultimately move AD to the left d. NX to decrease, which would ultimately move AD to the right

a

As discussed in class and in the textbook, the entity that calculates the CPI is the ____, while the entity that determined the beginning and ends of business cycles is _____. a. Bureau of Labor Statistics; National Bureau of Economic Research b. Bureau of Economic Analysis; Bureau of Economic Analysis c. National Bureau of Economic Research; Bureau of Economic Analysis d. Bureau of Labor Statistics; Bureau of Labor Statistics

a

As discussed in lecture, which of the following parts of U.S. debt is the largest? a. The portion of the debt that we owe to individual investors. b. The portion of the debt that we owe to the Federal Reserve. c. The portion of the debt that we owe to state and local governments. d. It's a trick question, a) and b) are almost exactly the same size.

a

Assume current GDP is $16 trillion and full employment output is $22 trillion. If the MPC is .75, and initial injection of G would need to be ____ to fill the gap, while an initial tax cut would need to be ____ to successfully fill the gap. a. $1.5 trillion; $2 trillion b. $500 billion; $700 billion c. $750 billion; $1 trillion d. None of the above

a

Assume the MPC = 0.75. Which of the following is correct? An initial injection of $500 billion into the economy, after it "ripples" through, ultimately will increase overall output... a. From $18 trillion to $20 trillion b. From $17 trillion to $20 trillion c. From $19 trillion to $20 trillion d. None of the above

a

Assume the current reserve requirement is 6%. Also assume people keep 20% out as currency. Assume a $40,000 initial deposit is made into a bank. If the bank loans out all that it can, and all loans are re-deposited into the same bank, taking into account what people keep out as currency, which of the following comes closest to the total amount of deposits—including the initial deposit—once the money has worked its way entirely through the system? a. $184,000 b. $132,000 c. $251,000 d. $288,000

a

Consider the following three statements: I. Reducing taxes is one example of monetary policy. II. Monetary policy decisions made by the Federal Reserve must be approved by Congress. III. The Chairman of the Federal Reserve must be approved by the Senate. Which statement below is most accurate? a. I and II are incorrect; III is correct b. I and III are incorrect; II is correct c. I, II, and III are all correct d. Only I is correct

a

Consider the following two phenomena: I. The dollar gets stronger compared to other currencies II. (X-M) decreases because M increases Which of the following is most accurate if interest rates rise in the U.S. (compared to interest rates in other countries)? a. Both I and II are correct b. Neither I nor II is correct c. Only I is correct d. Only II is correct

a

Consider these three statements: I. Interest rates increase II. Government spending decreases III. Consumption and Investment increase Which of the following is most correct regarding "crowding out" as we discussed it in lecture? a. I is part of "crowding out"; II and III are not b. II is part of "crowding out"; I and III are not c. III is part of "crowding out"; I and II are not d. Actually, all three are part of "crowding out" as we discussed in lecture

a

Consider these three statements: I. M1 gets bigger II. M2 gets bigger III. M2 stays the same Assume you take $1000 out of your savings account and keep it as currency. Which of the following is most accurate regarding how this will affect the monetary aggregates we discussed in class? a. I and III will happen; II will not b. I and II will happen; III will not c. I will happen; II and III will not d. None of the above

a

The difference between a nominal and a real interest rate is... a. The nominal rate equals the real rate plus the inflation rate b. The real rate is ther ate you actually see advertised in the paper or online, and the nominal rate takes into account inflation c. The nominal rate is the real rate divided by the inflation rate d. The real rate is the nominal rate multiplied by the inflation rate

a

Which of the following is not part of the graph for the market for loanable funds? a. The amount of net exports that makes up the (X-M) in GDP b. The interest rate c. The amount of investment that makes up the "I" in GDP d. Actually all of the above are part of the graph

a

While looking at the market for smartphones, consider these two things happening at the same time: I. The technology used to produce smartphones improves significantly. II. The incomes of buyers of smartphones increases, and smartphones are a normal good. After any and all curves have shifted, what will we see in the market? a. A higher equilibrium price, and we cannot say about equilibrium quantity. a. A higher equilibrium quantity, and we cannot say about equilibrium price. a. A lower equilibrium price and a lower equilibrium quantity. d. None of the above

a

Assume you have calculated the Taylor Rule and the result is 1.0. What exactly is it that you have calculated? (In other words, what is the Taylor Rule used for?)

a target for the nominal Fed Funds Rate

*Consider the following two statements regarding the business cycle: I. If we're in a recession we know prices are falling II. If we're in an expansion we know unemployment is declining Which is most accurate? a. I and II are both correct b. I and II are both incorrect c. I is correct; II is incorrect d. II is correct; I is incorrect

b

As discussed in lecture, if unemployment is being caused by the existence of a minimum wage it must be that... a. The minimum wage is below the "market" wage b. The minimum wage is above the "market" wage c. The minimum wage is equal to the "market" wage d. None of the above

b

Assume that Full Employment Output is $20 trillion, and the current GDP is $17.5 trillion. If the government believes they can successfully fill the gap between those two with an initial injection of $500 billion of spending, what is value that they believe the MPC is? a. 0.75 b. 0.8 c. 0.6 d. None of the above

b

Based on our discussion in lecture of the Phillips Curve, which of the following is a the correct term regarding the idea that people base their expectations of inflation on what inflation was the previous year? a. Rational Expectations b. Adaptive Expectations c. Nominal Expectations d. Cyclical Expectations

b

If you believe you can successfully fill a gap between current GDP of $17.6 trillion and potential GDP of $20 trillion by either a tax cut of $800 billion OR an inject of government spending of $600 billion, you must believe that... a. The MPC is .8 b. The MPC is .75 c. The MPC is .6 d. None of the above

b

In Chapter 12, we examined the factors that affect the different parts of AE. Which of the following is correct as we learned in Chapter 12? a. Interest rates affected the "Planned Investment" part of AE but it did not affect the "Consumption" part b. Taxes affected the "Planned Investment" part of AE but it did not affect the "Net Exports" part c. The exchange rate affected the "Consumption" part of AE but it did not affect the "Planned Investment" part d. Actually both a) and b) are correct

b

Products A and B are complements on the demand side. If the price for Product A decreases what will we see in the market for Product B? a. Demand shifting left which is a decrease in demand b. Demand shifting right which is an increase in demand c. Demand shifting left which is a decrease in quantity demanded d. Demand shifting right which is an increase in quantity demanded

b

Recall our discussions in lecture of the financial meltdown. Which of the following is correct? a. Collateralized debt obligations were a type of insurance you could purchase on a credit default swap b. Credit default swaps were a type of insurance you could purchase on collateralized debt obligations c. Both a) and b) are correct d. Neither a) nor b) is correct

b

Which of the following is not a component of "I" in GDP? a. Business Structures b. Durable goods c. Residential investment d. Actually all three are components of "I" in GDP

b

Which of the following was not listed in the book as one of the answers to the question "Why don't more low-income countries experience rapid growth?" (or, as Brian puts it, "Why isn't the whole world rich?") a. Corruption and failure to enforce the rule of law b. Insufficient natural resources c. Wars and revolutions (also known as political instability) d. Poor public education and health

b

List the three names for the vertical line on the AS/AD model.

long run aggregate supply, full output, potential GDP

Which of the following will not result in a lower equilibrium price in the market you're looking at? a. You're looking at the market for butter, and the price of margarine decreases. b. You're looking at the market for motorcycle helmets and the price of motorcycles decreases. c. You're looking at the market for electric cars, and the technology used to make electric cars improves. d. Actually, all three will result in a lower equilibrium price.

b

Which of the following would not shift SRAS to the left? a. The price of oil increases significantly and quickly b. Technology advances significantly and quickly c. Real wages (labor costs) increase significantly and quickly d. Actually all three of these above would shift SRAS to the left

b

According to the textbook, economists estimate the size of the U.S. "Underground Economy" to be: a. At most 3% of GDP b. At most 5% of GDP c. At most 10% of GDP d. At most 20% of GDP

c

As discussed in lecture, what was the "magic number" for how much debt is "too much" that two Harvard economists came up with which turned out to be not such a magic number at all when a lowly little graduate student proved them wrong? a. Debt-to-GDP ratio of 150% b. Debt-to-GDP ratio of 100% c. Debt-to-GDP ratio of 90% d. Debt-to-GDP ratio of 75%

c

As discussed in the text, sometimes the CPI market basket contains one good, such as a ticket to a movie in a theatre, and an increase in the price of the movie ticket causes people to shift their purchases to something else instead, like streaming a movie on Netflix. This is called _______ and it means that the CPI may _______ how price changes affect consumers. a. Quality Bias; overstate b. New Product Bias; understate c. Substitution Bias; overstate d. Substitution Bias; understate

c

Assume the current number of "discouraged workers" in the U.S. in February (according to the BLS) is 6 million. Assume in March that 1 million of these "discouraged workers" start looking for a job. They do not find a job, but they start looking. Which of the following is correct assuming nothing else changes? a. The numerator of U6 will be smaller in March than it was in February. b. The numerator of U6 will be larger in March than it was in February. c. The numerator of U6 will be unchanged between March and February. d. None of the above.

c

Assume the current reserve requirement is 10%. Also assume people keep 15% out as currency. Assume a $30,000 initial deposit is made into a bank. If the bank loans out all that it can, and all loans are re-deposited into the same bank, taking into account what people keep out as currency, which of the following comes closest to the total amount of deposits—including the initial deposit—once the money has worked its way entirely through the system? a. $184,000 b. $162,000 c. $138,000 d. $112,000

c

Consider the following purchases: I. A new Toyota Prius is built and sold in Alabama in 2016. (Toyota is a Japanese company). II. A new Ford Figo is built and sold in India in 2016. (Ford is a U.S. company). Which is correct? a. Both I and II would be included in a calculation of U.S. GDP for 2016 b. Neither I nor II would be included in a calculation of U.S. GDP for 2016 c. Only I would be included in a calculation of U.S. GDP for 2016 d. Only II would be included in a calculation of U.S. GDP for 2016

c

Consider the following two statements: I. The value of leisure is not included in GDP. II. The purchase of financial assets, such as stocks and bonds, is not included in GDP. Which is correct? a. Both I and II were listed in the textbook as"Shortcomings of GDP as a Measure of Well-Being" b. Neither I nor II was listed in the textbook as"Shortcomings of GDP as a Measure of Well-Being" c. Only I was listed in the textbook as"Shortcomings of GDP as a Measure of Well-Being" d. Only II was listed in the textbook as"Shortcomings of GDP as a Measure of Well-Being"

c

Consider the graph of the "per-worker production function." What is depicted on the vertical axis? a. Number of workers (or "quantity of labor") b. Equipment per hour worked (or "capital" per hour worked) c. Output (or "real GDP" per hour worked) d. None of the above

c

Consider these three purchases that take place in 2016: I. A house is sold in Overland Park, KS that was originally built and sold in 1992. II. The highway patrol for the State of Kansas purchases 100 brand new cars for its officers. III. A newlywed couple in KC purchases a new, custom-built bed from Unruh Furniture Which of the following is most accurate? a. All three purchases would be included in 2016 GDP and all three would be part of "durable goods." b. Only #1 and #2 would be included in 2016 GDP, and both of those would be part of "durable goods." c. Only #2 and #3 would be included in 2016 GDP, but only #3 would be part of "durable goods." d. Only #1 and #3 would be included in 2016 GDP, and both of those would be part of "durable goods."

c

Consider these three statements: I. Signed into law by President Bush II. Approximately $840 billion III. Included both tax cuts and government spending Which is most accurate? a. I and II describe TARP; III describes the ARRA (Stimulus) b. I and II describe the ARRA (Stimulus); III describes TARP c. II and III describe the ARRA (Stimulus); III describes TARP d. II describes TARP; I and III describe the ARRA (Stimulus)

c

Consider these two statements: I. In reality, the Fed often changes the reserve requirements if it wants to adjust the money supply. II. In reality, the Fed often buys/sells government bonds if it wants to adjust the money supply. Which of the following is most accurate? a. Both I and II are correct b. Both I and II are incorrect c. Only II is correct d. Only I is correct

c

Following directly from above, Richard has been looking for a new job every single day since he was fired. He has never missed a day looking. In a normal calculation of U6 by the BLS, Richard would be... a. Included in the numerator but not the denominator b. Included in the denominator but not the numerator c. Included in both the numerator and the denominator d. Not included in either the numerator or the denominator

c

If buyers of jet skis expect the drive to decrease in the future we will see _____________ today, and if sellers of jet skis also expect the price to decrease in the future we will see ______________ today. a. Demand shift right; supply shift left b. Demand shift right; supply shift right c. Demand shift left; supply shift right d. Demand shift left; supply shift left

c

If the value of the GDP Deflator in 2015 is exactly 110.7 and the value of the nominal GDP in 2015 is 19.7 trillion, which of the following comes closest to the value of real GDP in 2015? a. 16.2 trillion b. 16.9 trillion c. 17.8 trillion d. 18.4 trillion

c

In class you were asked to memorize the four largest components (in terms of weight) in the CPI market basket. Which of following was not one of those four largest components? a. Transportation (including gasoline) b. Medical expenses c. Recreation d. It's a trick question; all three of these were among the four largest components of the CPI market basket

c

In our discussion of the Phillips Curve, which of these cause the short-run Phillips curve to shift upward? a. An increase in unemployment b. An increase in real GDP c. An increase in expected inflation d. An increase in the real interest rate

c

In the text, when your author was discussing tax cuts and supply-side effect, which of the following was not listed as one of the three impacts of reducing corporate income taxes? a. The pace of technological change might increase b. Corporations would see a higher return on investment in new equipment c. Corporations would hire more employees as their tax rates fall d. Actually all three were listed as impacts of reducing corporate income taxes

c

Richard was fired two months ago from his job as an architect specifically because he refused to use a computer and architectural software to do his designs and blueprints; he still insists on creating all his designs and blueprints using paper and pencil. Richard's situation would be best characterized as... a. Seasonal Unemployment b. Frictional Unemployment c. Structural Unemployment d. Cyclical Unemployment

c

Suppose a tax cut successfully closes the gap between current GDP of $16.3 trillion and potential GDP of $19 trillion. If the MPC = .75, how much was the original tax cut? a. 600 billion b. 800 billion c. 1 trillion d. None of the above

c

What of the following is correct? a. The U3 in Brianlandia is significantly higher than the current value of U3 for the U.S. (more than 2% higher) b. The U3 in Brianlandia is significantly lower than the current value of U3 for the U.S. (more than 2% lower) c. The U3 in Brianlandia is identical or nearly identical to the current value of U3 for the U.S. (within ½ a percent) d. None of the above is correct

c

You are looking at the AD/SRAS/LRAS model and AD and SRAS are currently intersecting to the right of LRAS. Now, you open up the paper and read that real wages (labor costs) are declining. Which of the following is most accurate regarding what you could expect to see on the graph as a result of this? a. Unemployment was at 8% and it decreases to 7.5% b. Unemployment was at 8% and it decreases to 8.5% c. Unemployment was at 4% and it decreases to 3.5% d. Both a) and c) are accurate but not b)

c

You are looking at the market for tortilla chips. Two things happen at the same time: (I) the price of corn decreases and (II) the price of salsa, a complement, decreases. In the market for tortilla chips we will see: a. Demand shift left, supply shift left; higher equilibrium price but cannot say about equilibrium quantity b. Demand shift left, supply shift right; higher equilibrium quantity but cannot say about equilibrium price c. Demand shift right, supply shift right; higher equilibrium quantity but cannot say about equilibrium price d. Demand shift left, supply shift left; lower equilibrium price but cannot say about equilibrium quantity

c

You're looking at the market for Diet Coke. Consider these two things happening separately (not at the same time): I. The price of Diet Pepsi decreases. II. The incomes of buyers of Diet Coke increase, and Diet Coke is a normal good. Which is correct? a. Neither I nor II would cause the demand curve for Diet Coke to shift left b. Both I and II would cause the demand curve for Diet Coke to shift left c. Only I would cause the demand curve for Diet Coke to shift left d. Only II would cause the demand curve for Diet Coke to shift left

c

As discussed in the text and in lecture, if AE is different from GDP, it is primarily because of _____ and, specifically, because of ______ . a. C; durable goods b. I; residential investment (new houses) c. G; federal spending on defense d. I; changes to inventories

d

Assume that GDP is 6% below where we want it to be, and inflation is 2% above where we want it to be. Also, assume current inflation is 1% and the real Fed Funds Rate is 1%. According to the Taylor Rule, if the weights on the output gap and inflation gap are each 0.5, what should the nominal Fed Funds Rate be set at? a. 4% b. 1% c. 2% d. None of the above

d

Assume that GDP is 7% below where we want it to be, and inflation is 3% above where we want it to be. Also, assume current inflation is 4% and the real Fed Funds Rate is 1%. According to the Taylor Rule, if the weights on the output gap and inflation gap are each .5, what should the nominal Fed Funds Rate be set at? a. 4% b. 1% c. 2% d. None of the above

d

Consider the following two items: I. A Ford F-150 pickup truck made and sold in Mexico (Ford is a U.S. company) II. A Mitsubishi Mirage made and sold in Alabama (Mitsubishi is a Japanese company) Which of the following is correct? a. I would be included in a calculation of U.S. GDP but II would not b. II would be included in a calculation of U.S. GNP but I would not c. Both I and II would be included in a calculation of U.S. GNP but not U.S. GDP d. None of the above is correct

d

Consider the following: I. The exchange rate II. The unemployment rate III. The price level What of the following is correct? a. I and II will affect (planned) investment as a part of AE; III will not b. II and III will affect (planned) investment as a part of AE; I will not c. I will affect (planned) investment as a part of AE; II and III will not d. None of the above

d

Consider these four statements: I. Today, in April 2017, our debt is the highest it has ever been II. Today, in April 2017, our debt-to-GDP ratio is the highest it has ever been III. Last year, for 2016, our deficit was the highest it had ever been IV. We have never had to raise the "debt ceiling" in this country before this year Which is most accurate? a. Only IV is correct b. Only III is correct c. Only II is correct d. Only I is correct

d

Consider these three statements regarding "Quantitative Easing" that we discussed in class: I. If the interest rate on long term bonds decreases, other long term interest rates will decrease as well. II. If the price of long terms bonds decreases, the interest rate on long term bonds will decrease as well. III. The Fed's goal was to reduce the prices of long term bonds. Which is most accurate? a. I, II, and III are all incorrect b. I, II, and III are all correct c. Only II is correct d. Only I is correct

d

Consider these three statements: I. The current level of the Federal debt is approximately $20 trillion. II. The current level of the Federal debt is too high. III. The current level of the Federal debt should be lowered through a government austerity program. Which is correct? a. Statements I and III are positive statements; statement II is a normative statement. b. Statements II and III are positive statements; statement I is a normative statement. c. Statements I and II are positive statements; statement III is a normative statement. d. Actually none of the above is correct

d

Consider these three statements: I. Fiscal policy is enacted by the Federal Reserve. II. One example of fiscal policy would be a reduction in taxes. III. One example of fiscal policy would be raising interest rates. Which is most accurate? a. I, II, and II are all incorrect b. I, II, and II are all correct c. III is correct; I and II are incorrect d. I and III are incorrect; II is correct

d

In the country of Brianlandia there are 78 million people currently working; this includes both full-time and part-time. There are 4 million people who are not working but have looked for a job in the past 4 weeks. There are 58 million people who are at least 16, not working, have not looked in the past 4 weeks, and are not in the hospital, prison, or military. If Brianlandia calculated U3 as the BLS does for the U.S., which of the following comes closest its value? a. 6.2% b. 5.6% c. 5.1% d. 4.9%

d

In the market for loanable funds, if there is a decrease in corporate taxes, we would see... a. The supply of loanable funds shift left, producing a higher interest rate b. The demand for loanable funds shift left, producing a lower interest rate c. The supply of loanable funds shift right, producing a lower interest rate d. The demand for loanable funds shift right, producing a higher interest rate

d

Regarding the Quantity Theory of Money that we discussed in class, if real GDP is $12 trillion and the price level is "2" and the money supply is 8 trillion, what must the value of velocity be? a. 8 b. 6 c. 4 d. None of the above

d

The U.S. dollar becomes weaker compared to all other major currencies in the world. On an SRAS/AD/LRAS graph, we would see... a. Higher unemployment b. Higher price levels c. A rightward shift in AD d. b) and c) but not a)

d

The graph depicts the concept of "diminishing returns" (or "diminishing marginal productivity"). Consider these two statements: I. All inputs are variable. II. At least one input is fixed. Which of the following is most accurate? a. Both I and II are parts of the description of diminishing returns b. Neither I nor II are parts of the description of diminishing returns c. Only I is part of the description of diminishing returns d. Only II is part of the description of diminishing returns

d

Throughout 2008 and 2009, the Federal Reserve spent billions of dollars buying bonds. The goal of this action was to _______ which would have the effect of _______, ultimately producing a _______ level of output. a. Decrease the money supply; pushing AD to the left; lower b. Decrease the money supply; pushing AD to the right; higher c. Increase the money supply; pushing AD to the left; lower d. Increase the money supply; pushing AD to the right; higher

d

Two weeks ago, on March 15th, the Federal Reserve's Federal Open Market Committee voted to do what? a. To lower the reserve requirement b. To lower the target for the Fed Funds Rate c. To buy $1 billion worth of government bonds in order to increase the money supply d. None of the above

d

What is on the vertical axis of the money market graph? a. The overall price level b. Real GDP c. The velocity of money d. None of the above

d

Which of the following is correct based on our discussion of the Federal Government's budget in lecture? On the revenue side (money flowing into the government): a. Payments from corporate income taxes make up a larger part of revenue than payments on social security taxes b. Payments from corporate income taxes make up a larger part of revenue than individual income taxes c. Actually, both a) and b) are correct d. Actually, neither a) or b) is correct

d

You are looking at the AD/SRAS curves and they are intersecting to the left of LRAS. Which of the following would cause a shift in AD in such a way as to move the intersection closer to LRAS? a. a decrease in banks' reserve requirement b. an increase in the incomes in the rest of the world c. an increase in consumer confidence and improved consumer expectations d. all of the above

d

You are looking at the market for apple pies. You see that the price of apples has increased significantly. In the market for apple pies we will see: a. Supply shift right, producing a lower equilibrium quantity and a lower equilibrium price b. Supply shift left, producing a lower equilibrium quantity and a lower equilibrium price c. Supply shift right, producing a higher equilibrium quantity and a higher equilibrium price d. Supply shift left, producing a higher equilibrium quantity and a higher equilibrium price

d

In the Quantity Theory of Money, what exactly does "PY" represent?

nominal GDP

As discussed in lecture, the basic idea between supply side economics is that lowering the taxes on an activity will do what?

increase amount of that activity