The short-run aggregate supply curve shows the relationship between
a. the general level of prices and the quantity of goods and services purchased by all consumers in the economy.
b. the general level of prices and the quantity of goods and services that domestic firms will supply.
c. the interest rate and the quantity of goods and services that domestic firms will supply.
d. the money supply and the quantity of goods and services that domestic firms will supply.
B
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Which of the following does NOT occur if Home starts a policy of permanent fiscal expansion:
A) Home's exchange rate increases. B) Foreign's interest rate rises. C) Home output rises. D) Foreign output rises. E) Current Account Balance increases.
According to the contract theory of wages, firms and workers agree on a contract that fixes
a. money wages. b. real wages. c. money wages and employment. d. real wages and employment.
The formal study of economics began when Adam Smith (1723-1790) published his famous book The Wealth of Nations in 1776. In the first chapter of The Wealth of Nations, Smith introduces the idea of the division of labor. Define "division of labor" and illustrate with an example.
What will be an ideal response?
To target a rate that is higher than the current interest rate, the Fed can:
A. sell government securities to reduce reserves. B. sell government securities to increase reserves. C. purchase government securities to increase reserves. D. purchase government securities to reduce reserves.