According to the classical model, changes in aggregate demand are driven by
a. changes in taxes.
b. changes in borrowing and lending.
c. changes in fiscal policy.
d. demand curve to the left and increases the price level.
D
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Suppose farmers in a given market can either grow soy beans or corn on their land. In addition, suppose an increase in the demand for corn causes the price of corn to increase. As a result of the increase in the price of corn, farmers who were already growing corn will earn an:
A. economic loss in the short run. B. economic profit in the long run. C. economic loss in the long run. D. economic profit in the short run.
Following a new deposit of $500, the loans of a commercial bank increase by $400. In this situation, the reserve ratio is most likely
A) 180 percent. B) 80 percent. C) 20 percent. D) 0 percent.
Information on money growth is available to the public with ________ lags, causing difficulty for the ________ of the New Classical approach
A) long, Friedman but not Lucas version B) long, Lucas but not Friedman version C) long, Friedman and Lucas versions D) short, Friedman and Lucas versions E) short, Friedman but not Lucas version
When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is:
A. at least $1.75 but less than $2. B. less than $1.75. C. exactly $2.00. D. exactly $1.75.