Question

Other things equal, what effect will each of the following changes independently have on the equilibrium...

Other things equal, what effect will each of the following changes independently have on the equilibrium level of real GDP in the private closed economy?

a. A decline in the real interest rate.

b. An overall decrease in the expected rate of return on investment.

c. A sizable, sustained increase in stock prices.

Homework Answers

Answer #1

ANSWER:

A) GDP will increase as consumers will invest and purchase more due to less interest earned.

B) GDP will decrease as there will be less return earned from the investment made by people and they will try to put the money in the banks for better returns.

C) GDP will increase as due to increased in stock prices , people will start spending more as they will feel that they are more wealthy compared to earlier and this will lead towards more consumption and subsequently more investment.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Other things being equal, which one of the following would increase the rate of economic growth,...
Other things being equal, which one of the following would increase the rate of economic growth, as measured by changes in real GDP? A. A decline in the amount of capital per worker B. A decline in the average length of the work week C. An increase in the size of the working-age population D. A decrease in the labor force participation rate
Other things being equal, which one of the following would increase the rate of economic growth,...
Other things being equal, which one of the following would increase the rate of economic growth, as measured by changes in real GDP? A. A decline in the amount of capital per worker B. A decline in the average length of the work week C. An increase in the size of the working-age population D. A decrease in the labor force participation rate
For each of the following 4 changes (other things equal), has the value of the country's...
For each of the following 4 changes (other things equal), has the value of the country's current account balance increased (become more positive of less negative), decreased (become less positive of more negative) or stayed the same? 1-Net foreign investment of the country increases. A-Stay the same B-Decrease C-None of the above D-Increase 2- Exports of goods and services increases by $10m and imports of goods and services increases by $10m. A-Increases B-Decreases C-Stays the same D-None of the above...
Suppose that each​ 0.1-percentage-point increase in the equilibrium interest rate induces a ​$3 billion decrease in...
Suppose that each​ 0.1-percentage-point increase in the equilibrium interest rate induces a ​$3 billion decrease in real planned investment spending by businesses. In​ addition, the investment multiplier is equal to 4​, and the money multiplier is equal to 4 ​Furthermore, every ​$9 billion decrease in the money supply brings about a​ 0.1-percentage-point increase in the equilibrium interest rate. Use this information to answer the following questions under the assumption that all other things are equal. Calculate by how much the...
An increase in the price level, other things equal, will shift the _____. consumption, investment, and...
An increase in the price level, other things equal, will shift the _____. consumption, investment, and net exports schedules of the aggregate expenditures model downward consumption, investment, and net exports schedules of the aggregate expenditures model upward consumption and investment schedules of the aggregate expenditures model upward, but the net exports schedule downward consumption and net exports schedules of the aggregate expenditures model upward, but the investment schedule downward The foreign purchases, interest rate, and real-balances effects explain why the...
For each of the following 2 changes (other things equal), has the value of the country's...
For each of the following 2 changes (other things equal), has the value of the country's current account balance increased (become more positive of less negative), decreased (become less positive of more negative) or stayed the same? 1-National expenditures of goods and services increase by  $150 billion and production of goods and services increases by $100 billion. A-Increase B-Decrease C-Stay the same D-None of the above 2- To assist recovery from a foreign disaster, the country gives a foreign transport authority...
(1) Other things being equal, which of the following will most likely occur in the United...
(1) Other things being equal, which of the following will most likely occur in the United States as the result of an unexpected economic slowdown in Canada and Mexico? Group of answer choices an increase in aggregate demand and output in the short run an reduction in aggregate demand and output in the short run an increase in the price level a decrease in the natural rate of unemployment in the United States (2) A leftward shift in the demand...
(1) If the spending multiplier equals 10 and the actual equilibrium real GDP is $4 billion...
(1) If the spending multiplier equals 10 and the actual equilibrium real GDP is $4 billion below potential real GDP, then other things being equal, _____ to reach the potential real GDP level. Group of answer choices autonomous spending needs to increase by $40 billion real GDP needs to increase by $40 billion autonomous spending needs to increase by $4 billion real GDP needs to increase by $0.4 billion autonomous spending needs to increase by $0.4 billion (2) Other things...
In the following question you are asked to determine, other things equal, the effects of a...
In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a complement to X will: Multiple Choice decrease D, decrease P, and decrease Q. increase D,...
2. According to the law of demand, other things being equal, the lower the price of...
2. According to the law of demand, other things being equal, the lower the price of an assigned textbook, the _______________ the quantity demanded of assigned textbooks will be, and the ______________ likely students will seek out an alternative to the assigned textbook. Group of answer choices lower; less lower; more higher; less higher; more 4. Other things being equal, an increase in the number of sellers of a good will __________________ for that good. Group of answer choices increase...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • The number of "destination weddings" has skyrocketed in recent years. For example, many couples are opting...
    asked 2 minutes ago
  • A six-lane multilane highway (three lanes in each direction) has a peak-hour factor of 0.90, 11-ft...
    asked 4 minutes ago
  • In the sum A→+B→=C→, vector A→ has a magnitude of 13.9 m and is angled 37.5°...
    asked 33 minutes ago
  • A restaurant association says the typical household spends a mean of ​$3217 per year on food...
    asked 40 minutes ago
  • For the following statements, choose between: false dilemma, slippery slope, begs the question, appeals to ignorance,...
    asked 40 minutes ago
  • What are the channels of distribution with foreign markets for Indian canned foods or frozen foods?...
    asked 44 minutes ago
  • Question is : Sexual harassment is a claim that must be based on sex. 1. What...
    asked 45 minutes ago
  • Protein concentration can be estimated by measuring the absorbance of protein-containing solutons using UV light. Give...
    asked 49 minutes ago
  • A team of students opened a soda pop can underwater and collected the gas released from...
    asked 1 hour ago
  • Which of the General Principles of the American Psychological Association relates to maximizing the positive outcomes...
    asked 1 hour ago
  • 1A With all other parameters constant (Sample rate, Bitrate, Frequency), which of the following will definitely...
    asked 1 hour ago
  • Multiple Choice Choose the single choice among the 4 choices that best completes the statement or...
    asked 1 hour ago