Which of the following helps explain why the aggregate demand curve slopes downward?
a. If the price level increases, the purchasing power of the fixed quantity of money decreases, causing people to buy less.
b. If the price level increases, the purchasing power of the fixed quantity of money increases, causing people to buy more.
c. If domestic prices increase, we substitute domestic goods for imported goods.
d. If domestic prices decrease, we substitute imported goods for domestic goods.
A
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A country that joins an exchange rate area
A) gives up its ability to use the exchange rate for the purpose of stabilizing output and employment. B) does not give up its ability to use the exchange rate and monetary policy for the purpose of stabilizing output and employment. C) gives up its ability to use the exchange rate and monetary policy for the purpose of stabilizing output and employment. D) gives up its ability to use only monetary policy for the purpose of stabilizing output and employment. E) does not gives up its ability to use only monetary policy for the purpose of stabilizing output and employment.
In the IS-LM model, if interest rates fall while output falls the
a. money supply must have fallen. b. price level must have fallen. c. money supply must have risen. d. level of government spending must have risen. e. none of the above.
An economy using money is more efficient that a barter economy because the use of money reduces the time spent searching for trading partners with a coincidence of wants and therefore more time can be spent producing goods and services
a. True b. False Indicate whether the statement is true or false
In Figure 6.6 if price is P1, then the industry will:
A. expand. B. contract. C. stay the same size. D. merge.