Figure 4-7 -Using the Information Contained in the Figure Above, the Initial

question 56

Multiple Choice

Figure 4-7
-Using the information contained in the figure above, the initial equilibrium Y is 3500. If there is 500 of new fiscal stimulus and a constant money supply, Y will increase to ________ and the interest rate will ________.

• A) 4000; remain constant
• B) 4000; rise to 10%
• C) 4500; rise to 12.5%
• D) 5500; remain constant

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Definitions:

Economic Units

Entities such as households, businesses, and governments that engage in economic activities including production, consumption, and exchange of goods and services.

Positive Statement

An objective analysis or statement based on factual information, without any subjective or opinion-based commentary.

Balance Of Trade

The difference in value between a country's imports and exports over a certain period of time.

Electoral College

The Electoral College is a constitutionally established body in the United States that elects the President and Vice President, with electors from each state based on its representation in Congress.