Assume the central bank decides to raise the discount rate. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real credit market with supply of real credit shifting to the right.
b. Start the analysis in the real goods market with aggregate demand shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the left.
d. Start the analysis in the real credit market with demand for real credit shifting to the right.
e. Start the analysis in the real credit market with supply of real credit shifting to the left.
.E
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What is the difference between "capital" and "financial capital"? Which is a factor of production?
What will be an ideal response?
Ceteris paribus, an increase in the price of a good will cause the: a. quantity demanded of the good to increase
b. quantity supplied of the good to decrease. c. supply of the good to increase. d. consumer surplus derived from the good to decrease.
Suppose that velocity and output are constant and that the quantity theory and the Fisher effect both hold. What happens to inflation, real interest rates, and nominal interest rates when the money supply growth rate increases from 5 percent to 10 percent?
Does a subsidy to buyers affect the supply curve?
A. No, the quantity supplied will increase, but the supply curve does not move. B. No, the quantity supplied will decrease, but the supply curve does not move. C. Yes, it shifts supply up by the amount of the subsidy. D. Yes, it shifts supply to the right by the amount of the subsidy.