Key Relationships

Question 1

interest rates ^ –> investment ?

Answer 1

Decrease

Question 2

Taxes ^ –> Disposable Income?

Answer 2

Decrease

Question 3

Government Spending^ –> National Income?

Answer 3

Increase

Question 4

MPC^ –> Spending Multiplier?

Answer 4

Increase

Question 5

Capital Stock^ –> Growth?

Answer 5

Increase

Question 6

Inflation^ –> Real Wages?

Answer 6

Decrease

Question 7

Inflation^ –> Real Interest Rates?

Answer 7

Decrease

Question 8

Deficit Spending^ –> Interest Rates?

Answer 8

Increase

Question 9

Money Supply^ –> Interest Rates

Answer 9

Decrease

Question 10

Reserve Requirement^ –> Money Supply?

Answer 10

Decrease

Question 11

Discount Rate^ –> Money Supply?

Answer 11

Decrease

Question 12

Fed Buys bonds^ –> Money Supply?

Answer 12

Increase

Question 13

Interest Rates^ –> Bond Prices?

Answer 13

Decrease

Question 14

International value of a dollar^ –> US Net Exports?

Answer 14

Decrease

Question 15

Interest Rates^ –> Net Capital Inflow?

Answer 15

Increase

Question 16

Expected Inflation Rate^ –> AS?

Answer 16

Decrease

Question 17

Current A/C in surplus –> Financial A/C?

Answer 17

Deficit

Question 18

Currency Depreciates –> net exports?

Answer 18

Increase

Question 19

Currency Depreciates –> exports?

Answer 19

increase

Question 20

Currency Appreciates –> imports?

Answer 20

Increase