Quiz5 - PRINCIPLES OF MACROECONOMICS QUIZ#5 COVERING...

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Chapter 27 / Exercise 3
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PRINCIPLES OF MACROECONOMICS QUIZ #5 COVERING CHAPTERS 12 - 14 1. Describe the chain of events that are likely to unfold when the government reduces net taxes. Explain your answer in terms of its impact on aggregate output, the demand for money, the interest rate and planned investment Reduces net taxes Y increases M d increases r increases I decreases 2. Using the short-hand symbols Ms, r, I, Y, and Md to demonstrate the effects of an expansionary monetary policy.
3. Explain how aggregate quantity-demanded falls when the price level increases and the impact this has on interest rates and aggregate output.
4.Discuss how the consumption link provides another explanation for the downward-sloping aggregate demand curve.
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Chapter 27 / Exercise 3
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