In the short run, an unanticipated increase in the money supply will exert its primary impact on
a. output and employment rather than on prices.
b. prices; output and employment will be largely unaffected.
c. interest rates; rising interest rates will stimulate additional saving.
d. prices, if the economy operates at an output level below its long-run supply constraint.
A
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If a 10 percent cut in price causes a 15 percent increase in sales, then:
a. total revenue will decrease. b. demand is price inelastic in this range. c. demand is price elastic in this range. d. demand is unit elastic in this range. e. total revenue will remain the same.
A requirement that the budget be balanced each and every year would worsen the severity of economic fluctuations by preventing which of the following from working?
a. budget surpluses b. budget deficits c. automatic stabilizers d. manual stabilizers
If there is an unanticipated increase in aggregate demand, which of the following is most likely to occur?
a. a reduction in the price level b. an increase in the rate of unemployment c. an increase in employment d. an expansion in the federal budget deficit
If there is an excess supply of sport utility vehicles, then:
A. demand is greater than supply. B. quantity supplied is greater than quantity demanded. C. quantity demanded is greater than quantity supplied. D. supply is greater than demand.