As the general price level in the country of Norweinshire rose, the average interest rate in the economy increased, thereby lowering aggregate expenditure. This relationship between price level, interest rate, and aggregate expenditure is referred to as the:
a. total price effect.
b. interest rate effect.
c. wealth effect.
d. real-balance effect.
e. income effect.
b
You might also like to view...
Assume that autonomous consumption equals $200 and disposable income equals $1000. If total consumption equal $800, then the mpc equals
A) 0.2. B) 0.6. C) 0.8. D) 1.0.
Structural unemployment refers to unemployment that results from: a. inefficiencies in the market for labor that prolong the job search. b. being in the wrong geographical location
c. the specialization and division of labor. d. seasonal decreases in demand for labor. e. a recession in the economy.
Core inflation excludes price changes in food and energy because these price changes
a. may not be related to a trend in the economy’s overall price level. b. may be related to trend factors in the economy’s overall price level. c. are not volatile. d. show a constant inflation rate.
From 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything else constant, one would expect that, when compared to 1980
A) fewer Britons traveled to the United States in 1985. B) Britons imported more wine from California in 1985. C) Americans exported more wheat to England in 1985. D) more Britons traveled to the United States in 1985.