Which of the following is true, other things equal?
a. A reduction in prices will increase the real wealth of those holding a fixed quantity of money.
b. A reduction in prices will lead to a decline in net exports.
c. A reduction in prices will increase the scarcity of money, raise the real interest rate, and, thereby, encourage investment and consumption.
d. A reduction in prices will increase profit margins and, thereby, stimulate additional investment.
a
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The aggregate production function describes the relationship between
A) real GDP and the quantity of labor employed. B) real GDP and the price level. C) the rate of growth of real GDP and inflation. D) real GDP and the unemployment rate.
Extraneous events that are completely unrelated to economic fundamentals are called
A) moonbeams. B) black holes. C) sunspots. D) time warps.
Why does the opportunity cost of your college education include money you could have earned working instead of going to college?
A. Because most people who don't go to college work instead. B. Because the best alternative use of your time is working. C. Because people should be productive members of society. D. Because working a full time job takes as much time as going to college.
The change in real GDP resulting from an initial change in spending equals:
A. the initial change in spending times the nominal GDP. B. the amount of the initial change in spending. C. the initial change in spending times the multiplier. D. the initial change in spending divided by the multiplier.