Assume that equilibrium GDP (Y) is 5,000, consumption (C) is C = 500 + 0.6 (Y − T), taxes (T) are 1,000, and government spending is 600. Equilibrium investment is:

Assume that the consumption function is given by C = 150 + 0.85 (Y − T), the tax function is given by T = t0 + t1Y, and Y is 5,000. If t1 decreases from 0.3 to 0.2, then consumption increases by:

Assume that the investment function is given by I = 1,000 − 30r, where r is the real rate of interest (in percent). Assume further that the nominal rate of interest is 10 percent and that the inflation rate is 2 percent. According to the investment function, investment will be:

Skill-biased technological change _____ the demand for skilled workers, while a slowdown in the pace of educational advancement reduces the supply of skilled workers. Given these trends, we should expect _____ wages for skilled workers.

An economy’s factors of production and its production function determine the economy’s:

One cost of unexpected inflation, but not expected inflation, is:

According to the quantity theory of money, a 5 percent increase in money growth increases inflation by _____ percent. According to the Fisher equation, a 5 percent increase in the rate of inflation increases the nominal interest rate by _____ percent.

In the long run, according to the quantity theory of money and classical macroeconomic theory, if velocity is constant, then _____ determines real gross domestic product (GDP), and _____ determines nominal GDP.

Credit card balances are included in:

If the marginal product of capital of a competitive firm is lower than the real rental price of capital, then the firm should continue to hire workers until the: