Assume the central bank decides to pursue contractionary monetary policy. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the right.
b. Start the analysis in the real credit market with demand for real credit shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the right.
d. Start the analysis in the real credit market with supply of real credit shifting to the left.
e. Start the analysis in the real credit market with supply of real credit shifting to the right.
.D
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Suppose that the money wage in the economy increases by 8 percent. As a result the
A) long-run aggregate supply will decrease. B) long-run and the short-run aggregate supply both decrease. C) short-run aggregate supply will decrease. D) long-run aggregate supply will increase and the short-run aggregate supply will decrease.
Which of the following is TRUE regarding the chain-weighted output index method?
I. It is the method used to measure the growth rate of nominal GDP. II. It uses data from the current year and from the previous year. III. It is a method of measuring the growth rate of real GDP. A) I and II B) II and III C) I and III D) I, II and III
"Crowding out" refers to the decrease in ________ that may result from an increase in government spending
A) private investment B) imports C) private saving D) all of the above E) none of the above
The money multiplier largely depends on: a. people re-depositing the money that they receive in the banking system. b. the value of the deposits made in the banking system
c. the number of accounts in the banking system. d. the amount of cash available in an economy.