In which situation will inflation fall the fastest?
A. A negative supply shock occurs, the dynamic aggregate demand curve is steep and so is the monetary policy reaction curve
B. A negative supply shock occurs, the dynamic aggregate demand curve is flat and so is the monetary policy reaction curve
C. A negative supply shock occurs, the dynamic aggregate demand curve is steep, and the monetary policy reaction curve is flat
D. A negative supply shock occurs, the dynamic aggregate demand curve is flat, and the monetary policy reaction curve is steep
Answer: D
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Labor productivity is equal to the quantity of
A) real GDP. B) real GDP consumed by the total population in one hour. C) real GDP produced by one hour of labor. D) workers employed during one hour. E) workers who are gainfully employed.
What most accurately describes the US tariff policy between 1850 and 1910?
a. The US was strongly committed to free trade throughout the period. b. The US became more protectionist during the Civil War and the level of tariffs remained high through 1910. c. The US had very high tariff barriers at the beginning of this period, but lowered them consistently throughout this period.
Consider someone who borrows $10,000 to buy a car at a fixed interest rate of 9%. If inflation is 3% at the time the loan is made, what is the real interest rate at which the loan must be repaid, and to what level would the interest rate have to rise for the real interest rate on the loan to be zero?
a. 4.5%; 7.5% b. 6; 9% c. 8%; 10% d. 6; 12%
In the Keynesian model, a firm's high menu costs cause
A. efficiency wages. B. real-wage rigidity. C. full employment. D. price stickiness.