An increase in the real interest rate causes
A) the IS curve to shift to the right.
B) the IS curve to shift to the left.
C) a movement up the IS curve.
D) a movement down the IS curve.
What effect would economic weakness in Europe due to a sovereign debt crisis have on the U.S.economy?
A) The IS curve shifts to the right.
B) The IS curve shifts to the left.
C) Potential GDP increases.
D) Potential GDP decreases.
The marginal propensity to consume can best be described as
A) consumption / income.
B) the impact of a change in income on GDP.
C) the change in income divided by the change in consumption.
D) the change in consumption divided by the change in income.
The aggregate expenditure line is upward sloping since as GDP increases
A) consumption increases.
B) investment increases.
C) government purchases increase.
D) net exports increase.