If aggregate planned expenditure is greater than real GDP,
A) a planned decrease in inventories leads to a decrease in production.
B) a planned increase in inventories leads to an increase in production.
C) an unplanned decrease in inventories leads to an increase in production.
D) an unplanned decrease in inventories leads to an increase in the price level.
E) an unplanned increase in inventories leads to a decrease in production.
C
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Refer to Table 29-2. Given the following exchange rates in the above table, what are the exchange rates stated as U.S. dollars per Mexican peso and U.S. dollars per British pound respectively?
A) 0.10 dollars per peso and 2.00 dollars per pound B) 0.10 dollars per peso and 5.00 dollars per pound C) 1.00 dollars per peso and 20.00 dollars per pound D) 0.01 dollars per peso and 0.50 dollars per pound E) 0.01 dollars per peso and 0.20 dollars per pound
Which of the following events would cause the interest rates in an economy to increase?
a. Lower tax rates b. A high discount rate c. Lower reserve requirements d. An open market operation to buy bonds
According to the text, the most important of the five factors which give rise to monopoly is
A. economies of scale. B. patents. C. exclusive control over important inputs. D. network economies. E. government licenses.
Imagine that the Fed has unexpectedly lowered the reserve requirement, greatly increasing the amount of money in circulation. Explain what a rational expectations theorist would predict should happen in this situation over both the short run and the long run. Then give an example of what a critic of rational expectations theory would predict instead.
What will be an ideal response?