Question
So the question is during 2017, the U.S. aggregate real income, Y, increased sharply. We want to figure out what factors may have contributed to
So the question is during 2017, the U.S. aggregate real income, Y, increased sharply. We want to figure out what factors may have contributed to that income increase. Suppose that we know that the LM curve did not shift during that year and that the markets for money and for goods and services were both in equilibrium at all times. Which one of the following factors could have caused the increase in income in this situation? a. A temporary decrease in the domestic nominal interest rate. b. A decrease in the expected return on investment. c. A temporary increase in the domestic price level. d. A reduction in tax rates. e. All of the above.
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