The idea that a permanent increase in income causes a larger increase in consumption than a temporary change in income is called the
A) Friedman-Lucas theory.
B) permanent income hypothesis.
C) Ricardian equivalence theorem.
D) intertemporal substitution effect.
B
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Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity ________
A) rises; increases B) rises; does not change C) falls; does not change D) falls; decreases E) falls; increases
The costs of disinflation would be low if
A) expected inflation falls as inflation falls. B) wage and price controls were used. C) the Phillips curve were nearly horizontal. D) the Phillips curve adjusted slowly to changes in inflation.
According to the natural rate hypothesis, the natural rate of unemployment is largely dependent on the stimulus provided by monetary or fiscal policy
Indicate whether the statement is true or false
The ____ is a monetary measure of the economy’s output during a specific time period and is used by all nations to measure and compare national production.
Fill in the blank(s) with the appropriate word(s).