Describe the effects, in both the short run and the long run, of an increase in the money supply. Explain what happens to real output and the price level
What will be an ideal response?
In the short run, an increase in the money supply increases output and has no effect on the price level. In the long run, an increase in the money supply has no effect on output and increases the price level.
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An example of the interaction term between two independent, continuous variables is
A) Yi = ?0 + ?1Xi + ?2Di + ?3(Xi × Di) + ui. B) Yi = ?0 + ?1X1i + ?2X2i + ui. C) Yi = ?0 + ?1D1i + ?2D2i + ?3 (D1i × D2i) + ui. D) Yi = ?0 + ?1X1i + ?2X2i + ?3(X1i × X2i) + ui.
Workers in industrial countries earn much higher wages than workers in developing countries because:
a. the industrial countries are labor rich and capital poor economies. b. the industrial countries lack a steady supply of unskilled laborers. c. the industrial countries produce labor intensive goods. d. the marginal productivity of labor is low in the industrial economies. e. the marginal productivity of labor is high in the industrial economies.
If government spending increases, which of the following is most likely to occur?
a. GDP, money demand, the interest rate, and investment spending will all increase. b. GDP, money demand, the interest rate, and investment spending will all decrease. c. GDP, money demand and the interest rate will increase, while investment spending will decrease. d. GDP, money demand and the interest rate will decrease, while investment spending will increase. e. GDP and money demand will increase, but the interest rate will not change.
A mutual fund is a financial intermediary that pools funds from many investors, each of which may have only a relatively small amount of money available to invest, and divides it among many different firms to create a diversified portfolio
a. True b. False Indicate whether the statement is true or false