The real balances effect says that an increase in the price level
A. Reduces the real value of a fixed amount of savings, consequently reducing the quantity of goods and services purchased.
B. Increases the price of U.S. produced goods, causing foreign consumers to buy fewer U.S. goods.
C. Increases the need to borrow, which drives up interest rates and reduces loan-financed purchases.
D. Increases the price of U.S. produced goods, causing Americans to buy more imported goods.
Answer: A
You might also like to view...
Firms are more likely to devote resources to research and development when
A) the country is in recession. B) they expect to earn rewards from successful research and development. C) it is easy to copy new techniques of other firms. D) the country has been experiencing slow economic growth in order to spur economic growth.
Which of the following would not cause the market supply of cell phones to change?
A.) Telecommunications are deregulated, and anyone can produce and sell cell phones. B.) A cheaper technology for producing cell phones is developed. C.) A reduction in the demand for cell phones causes the price to fall. D.) Taxes levied on cell phone production are reduced.
Which of the following countries has the smallest percentage of its labor force employed in agriculture?
A. China. B. France. C. Brazil. D. United States.
An idea from monetarism which has been absorbed into mainstream macroeconomics would be the:
A. Effects of aggregate supply shocks on the level of real output and the price level B. Importance of the effects of changes in the money supply on the economy C. Use of discretion rather than rules for guiding economic policy in the economy D. Influence of real changes, such as in technology and resource availability, on the level of output