Which of the following explains why the Fed is able to have a dramatic effect on aggregate demand and real output in the short run?
A. price confusion that speeds up the adjustment of real GDP
B. money illusion that speeds up the adjustment of the price level
C. sticky prices that slow the adjustment of the price level
D. sticky wages that slow the adjustment of real GDP
Answer: C. sticky prices that slow the adjustment of the price level
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Consider an economy that has the following monetary data. The monetary base and the money supply are expected to grow at a constant rate of 20% per year. Inflation and expected inflation are 20% per year
Suppose that bank reserves and currency pay no interest, all currency is held by the public, and bank deposits pay no interest. What is the nominal value of seignorage over the year? A) $10 B) $60 C) $70 D) $200
Tariff rates make everyone better off in the country by protecting it from foreign competition
Indicate whether the statement is true or false
Assume that national income = $5,000 . C = $1,000 + 0.75(Y), and intended investment = $300 . Then
a. saving at Y = $0 is $1,000 b. saving at Y = $0 is also $1,000 + 0.75 (Y) because S = C in equilibrium c. there will be $50 of unplanned investment in inventories d. actual investment will equal $250 e. national income will decrease
Wage and property income before transfers and taxes is known as market income.
Answer the following statement true (T) or false (F)