Suppose that nominal aggregate demand falls by 4 percent, and at the same time every marginal cost also falls by 4 percent. The importance of menu cost theory is that in this situation the price level ________, meaning that a recession ________
A) must fall by 4 percent as well, does not occur
B) must fall by 4 percent as well, must occur
C) still might not fall, may not occur
D) still might not fall, may occur
D
You might also like to view...
The downward slope of a demand curve
A) represents the law of demand. B) shows that as the price of a good rises, consumers increase the quantity they demand. C) indicates how the quantity demanded changes when incomes rise and the good is a normal good. D) indicates how demand changes when incomes rise and the good is a normal good. E) indicates how demand changes when the price changes and the good is a normal good.
Since 1960, there have been how many years of budget surplus?
a. 5 b. 10 c. 20 d. 30
If real GDP is greater than potential GDP, then:
A. the output gap is negative. B. the actual unemployment rate is lower than the natural rate of unemployment. C. the actual unemployment rate equals zero. D. the actual unemployment rate is greater than the natural rate of unemployment.
Government expenditures for Social Security and unemployment insurance are, for GDP accounting purposes, considered:
A. transfers, and are included in government spending as part of GDP. B. transfers, and are not included in government spending as part of GDP. C. purchases, and are not included in government spending as part of GDP. D. purchases, and are included in government spending as part of GDP.