Use the following to answer questions:
Figure: Fiscal Policy II 
-(Figure: Fiscal Policy II) Look at the figure Fiscal Policy II. Suppose that this economy is in equilibrium at E2. If there is a decrease in government transfers, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.
Definitions:
Market Equilibrium
A market state where the quantity supplied equals the quantity demanded, leading to a balance in price and volume.
Interest Rate
The cost of borrowing money expressed as a percentage of the total amount borrowed.
Nominal Interest Rates
are the stated interest rates unadjusted for inflation, representing the actual current cost of borrowing or the raw yield on savings.
Central Bank Policies
Refers to the actions and strategies employed by a nation's central bank to control the money supply, manage inflation, and stabilize the currency.
Q74: This year, Alan purchases a home built
Q91: If Debbie gets a loan to remodel
Q119: If policy makers want to increase real
Q137: Many economists view resource scarcity as a:<br>A)major
Q178: Included in M1 are:<br>A)checkable bank deposits.<br>B)savings deposits.<br>C)U.S.
Q198: In 2011 many European countries signed a
Q211: Higher interest rates will lead to increased
Q217: Explain the difference between automatic stabilizers and
Q274: Transactions costs are likely to be the
Q391: (Figure: The Market for Loanable Funds III)