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13. Assuming that an economy’s aggregate demand is given by its domestic consumption C and investment I, AD = C + I = c0 + c1Y + I. In the economy’s goods market equilibrium, this equals its output: AD = Y. Solving for Y this yields:
Y = [1/(1 -c1 )] (c0+ I)
Given this equation, which of the following statements is correct?
14. In the US and the UK, loans are widely available based on a rise in home equity. Additionally, unlike in France and Germany where large down-payments (as a percentage of the house price) are required, in the US and the UK only small down-payments are required for house purchases. On the basis of this information, which of the following statements is correct for the US and the UK when there is a rise in housing prices?
15. Which of the following statements regarding fiscal policy is correct?
As a family worried about mounting debts should cut spending and save more, so should an economy adopt austerity measures when its debt level is high, to restore its public finances to balance
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