Government spending is a variable that is exogenous to the AS/AD model.
Answer the following statement true (T) or false (F)
True
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The quantity of real GDP supplied ________ when the price level increases because ________
A) increases; the real wage rate falls B) decreases; investment increases C) increases; the quantity of money increases D) increases; aggregate demand increases E) decreases; the real wage rate rises
Suppose that the effective return to a U.S. investor from buying a U.K. bond is 5.55%. Forward and spot exchange rates ($/£) are 2.10 and 2.00 respectively. The interest rate on the U.K. bond is most likely equal to:
A) 5.45% B) 5.500% C) 5.650% D) 5.60%
If a bond sells for $2,000 and pays $200 per year in interest, the interest rate on the bond is
A) 20 percent. B) 10 percent. C) 5 percent. D) 100 percent.
An increase in the interest rate would induce people to
A) sell shares of stock and buy bonds, but would have no effect on their desire to hold money. B) get rid of all their money and buy stocks with it. C) sell their least liquid assets and hold more money in case interest rates go up again. D) hold a smaller fraction of their wealth in the form of money.