For the goods market to be in equilibrium in a closed economy,which of the following must be TRUE?
A) Y = S + I + G
B) S + I = C + G
C) S + G = Y + C
D) S = I
In a closed economy,national saving equals
A) C + I + G.
B) Y - C - G.
C) Y - C - I.
D) Y - G - I.
All of the following are likely results of a negative demand shock EXCEPT
A) a negative output gap.
B) lower inflation.
C) the IS curve shifts to the left.
D) the Phillips curve shifts to the left.
Which of the following is the least likely to take place if the Fed responds to a negative demand shock by reducing the real interest rate?
A) The IS curve shifts to the right.
B) Output gap returns to zero.
C) Inflation returns to its previous rate.
D) The MP curve shifts down.