If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is immediate, then the
A) interest rate will fall.
B) interest rate will rise.
C) interest rate will fall immediately below the initial level when the money supply grows.
D) interest rate will rise immediately above the initial level when the money supply grows.
D
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The Phillips curve is thought to reflect the relationship between
A) unemployment and inflation. B) the price level and inflation. C) unemployment and real GDP. D) inflation and real GDP.
We can use macroeconomic analysis to
A) learn how to balance a checkbook. B) understand why economies grow. C) study the choices made by households. D) understand marginal changes in the macroeconomy.
When trying out for the football team, the coach may have candidates run a lap around the track. This is an example of:
A. signaling. B. screening. C. strength building. D. training.
Exhibit 15-1 Production possibilities curves
In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialize in the production of:
A. corn. B. corn and wheat. C. wheat. D. neither product since Pada has the absolute advantage in the production of both.