The real-balances effect indicates that:
A. an increase in the price level will increase the demand for money, increase interest rates,
and reduce consumption and investment spending.
B. a lower price level will decrease the real value of many financial assets and therefore
reduce spending.
C. a higher price level will increase the real value of many financial assets and therefore
increase spending.
D. a higher price level will decrease the real value of many financial assets and therefore
reduce spending.
D. a higher price level will decrease the real value of many financial assets and therefore
reduce spending.
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In a recession, automatic stabilization ________ tax revenues and ________ the debt-GDP ratio
A) lowers, raises B) lowers, lowers C) raises, raises D) raises, lowers
Refer to Scenario 14.4. Suppose that the price of the product rises to $5, the price of labor
A) will decrease. B) will increase. C) will not change. D) will change in an indeterminate fashion.
Fixed costs are:
A. costs that depend on the quantity of output produced. B. inputs costs that stay the same price per unit. C. costs that don't depend on the quantity of output produced. D. costs that are negotiated to stay the same throughout the life of a contract.
Which of the following refers to the additional cost of producing one more unit?
a. Marginal cost b. Variable cost c. Average cost d. Explicit cost