If inflation does not adjust rapidly in the short run, then when the Federal Reserve increases the nominal interest rate, the real interest rate in the short run will:
A. not change.
B. decrease.
C. increase.
D. be determined by saving and investment decisions.
Answer: C
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In the above figure, suppose that the government sets a limit to production at 10 units of output and the price rises to $4. In comparison to a competitive market the consumer surplus would fall by
A) $0. B) $10. C) $15. D) $20.
How does a change in the quantity of money change the interest rate in the short run?
What will be an ideal response?
In U.S. recessions, growth in total consumption is ________, which is ________ with the workings of the permanent-income and life-cycle hypotheses
A) largely uninterrupted, perfectly consistent B) largely uninterrupted, rather inconsistent C) noticeably reduced, perfectly consistent D) noticeably reduced, rather inconsistent
In a market economy, prices help determine the distribution of goods and services but not the allocation of resources
a. True b. False Indicate whether the statement is true or false