Keynesian economists believe that
a. an increase in the money supply leads to a higher price level
b. price changes adjust the value of the goods produced to the money supply
c. velocity and output are constant in the short run
d. an increase in production, if the money supply is held constant, will cause velocity to increase
e. an increase in the money supply leads to a decrease in nominal GDP
D
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According to the interest-rate-based transmission mechanism for monetary policy, a decrease in the money supply will cause the
A) interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand. B) interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand. C) interest rate to rise, causing planned real investment spending to fall and leading to a decrease in aggregate demand. D) interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
In the long run, an increase in the growth rate of the quantity of money ________ the inflation rate and ________ the nominal interest rate
A) raises; does not change B) lowers; raises C) raises; raises D) raises; lowers E) lowers; lowers
Political instability is an impediment to development mainly because it:
A. undermines both domestic and foreign investment in a developing country. B. creates cultural and social differences among groups in developing countries. C. produces excessive levels of domestic saving. D. redistributes income.
Economists use the word investment to refer to the portion of income that is:
A. placed in an individual's savings account. B. spent on productive inputs, such as factories, machinery, and inventories. C. not immediately spent on consumption of goods and services. D. in any interest-bearing account.