- 21.1: What is the theory of liquidity preference? Howdoes it help explain...
- 21.2: Use the theory of liquidity preference to explainhow a decrease in ...
- 21.3: The government spends $3 billion to buy policecars. Explain why agg...
- 21.4: Suppose that survey measures of consumerconfidence indicate a wave ...
- 21.5: Give an example of a government policy thatacts as an automatic sta...
- 21.6: In the early 1980s, new legislation allowedbanks to pay interest on...
- 21.7: Suppose economists observe that an increase ingovernment spending o...
- 21.8: Suppose the government reduces taxes by$20 billion, that there is n...
- 21.9: An economy is operating with output $400billion below its natural r...
- 21.10: Suppose government spending increases.Would the effect on aggregate...
- 21.11: In which of the following circumstances isexpansionary fiscal polic...
- 21.12: For various reasons, fiscal policy changes automaticallywhen output...
- 21.13: Some members of Congress have proposed alaw that would make price s...
Solutions for Chapter 21: Th e Infl uence of Monetary and Fiscal Policy on Aggregate Demand
Full solutions for Principles of Macroeconomics | 6th Edition
Solutions for Chapter 21: Th e Infl uence of Monetary and Fiscal Policy on Aggregate DemandGet Full Solutions
average variable cost
variable cost divided by the quantity of output
fluctuations in economic activity, such as employment and production
a difference in wages that arises to offset the nonmonetary characteristics of different jobs
cross-price elasticity of demand
a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in price of the second good
a banking system in which banks hold only a fraction of deposits as reserves
unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
gross domestic product (GDP)
the market value of all final goods and services produced within a country in a given period of time
goods produced abroad and sold domestically
transfers to the poor given in the form of goods and services rather than cash
a good for which, other things being equal, an increase in income leads to a decrease in demand
marginal rate of substitution
the rate at which a consumer is willing to trade one good for another
an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
median voter theorem
a mathematical result showing that if voters are choosing a point along a line and each voter wants the point closest to his most preferred point, then majority rule will pick the most preferred point of the median voter
nominal exchange rate
the rate at which a person can trade the currency of one country for the currency of another
a market structure in which only a few sellers offer similar or identical products
claims that attempt to describe the world as it is
the fraction of deposits that banks hold as reserves
a table that shows the relationship between the price of a good and the quantity supplied
a situation in which quantity supplied is greater than quantity demanded
total revenue (for a firm)
the amount a firm receives for the sale of its output