ECON 203 Study Guide - Midterm Guide: Real Interest Rate, Output Gap, Production Function
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Explain whether this statement is true or false. No marks will be awarded by simply stating true or false without explanation: in an economy without government, if investment demand and exports are given, the slope of aggregate expenditure is determined by the consumption function. In an economy without a government there is government spending (g). C+i+x-z and c and z have an induced component. I and x are autonomous, constant: if households expect that the expenditure programs are temporary and that there will be tax-increases in future to cover the deficits, expansionary fiscal policy may not stimulate aggregate spending. [ ] prices fell last month in the u. s. because companies paid less for energy, evidence. Current events that inflation remains under control. (u. s. wholesale prices decline, the globe and mail, feb 2012) Refer to the excerpt above to explain how the fall in energy prices decreased the prices for goods in the economy.
