The IS Curve Becomes Steeper When

question 69

Multiple Choice

The IS curve becomes steeper when

• A)government spending is relatively small.
• B)the income tax rate in the current period is relatively small.
• C)current changes in the real interest rate cause large changes in current real output.
• D)changes in the current real interest rate cause small changes in current demand.
• E) none of the above

Define and differentiate between command economies and laissez-faire economies.

Explain the principle of price as a coordinating mechanism in a laissez-faire economy.

Understand that pure forms of laissez-faire and command economies do not exist in reality.

Identify the tools and signals in a laissez-faire economy that provide individuals with the information needed to make decisions.

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Definitions:

Short-term Memory

The capacity for holding a small amount of information in an active, readily available state for a short period of time.

Chunks of Information

The grouping of individual bits of information into larger, more manageable units or chunks, facilitating easier information processing and memory retention.

George Miller

A psychologist renowned for his work on cognitive psychology and for proposing the theory that the average number of objects an individual can hold in working memory is seven plus or minus two.

Elaborative Rehearsal

A memory technique that involves thinking about the meaning of the term to be remembered, as opposed to simply repeating the word to yourself over and over.