According to the Aggregate Demand Aggregate Supply diagram, short-term, an anti-inflation policy creates:
A. higher output.
B. higher unemployment
C. lower inflation.
D. higher inflation.
Answer: B
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The real wage rate equals
A) (money wage rate)/(price level). B) (price level)/(money wage rate). C) (money wage rate) × (price level). D) (money wage) + (number of hours worked)/(price level).
For each of the following changes, what happens to the real interest rate and output in the long run, after the price level has adjusted to restore general equilibrium? How would the results differ, if at all, between the classical and Keynesian
model? Draw a diagram for each part to illustrate your result. (a) Wealth rises. (b) Money supply rises. (c) The future marginal productivity of capital increases. (d) Expected inflation declines. (e) Future income declines.
Stock and Watson found that monetary policy was responsible for about ________% of the reduction in output volatility that occurred in the mid-1980s
A) 0 to 10 B) 10 to 20 C) 20 to 30 D) 30 to 40
Mauritius, an island off the coast of Africa, competes with other countries producing goods with low-skilled labor. In 2006, it was reported that its "...factories have been exposed to ... competition from China, India, and other Asian mass producers." As a result, "the main export industry has seen a 30% reduction in volume..." The story describes:
a) a decrease in autonomous expenditure b) a decrease in induced expenditure c) an unplanned decrease in inventories d) an increase in equilibrium expenditure