According to the real balances effect, when the price level:
A. Falls, cash is worth less and therefore people buy less.
B. Falls, cash is worth more and therefore people buy more.
C. Rises, cash is worth less and therefore people buy more.
D. Rises, cash is worth more and therefore people buy less.
Answer: B. Falls, cash is worth more and therefore people buy more.
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Leaving the labor force or finding a job are two ways that:
A. an unemployment spell can begin. B. a person can become an involuntary part-time worker. C. a person can become a discouraged worker. D. an unemployment spell can end.
The money demand curve has a negative slope because
A) lower interest rates cause households and firms to switch from financial assets to money. B) lower interest rates cause households and firms to switch from money to financial assets. C) lower interest rates cause households and firms to switch from money to bonds. D) lower interest rates cause households and firms to switch from money to stocks.
When the Federal Reserve purchases treasury securities in the open market,
A. The sellers of such securities by new securities in the open market and there is an increase in bank reserves B. The sellers of such securities deposits the funds in their banks and bank reserves increase C. The buyers of those securities pay for them with checks drawn on their bank account and bank reserves increase
The table below shows the units of land and labor required to produce a unit of bread and cheese respectively in Country X. Identify the correct statement. 1 Unit of Bread1 Unit of CheeseLabor Input5 units20 unitsLand Input4 units10 units
A. Production of bread is relatively labor-intensive in the country. B. The opportunity cost of producing an extra unit of bread is four units of cheese. C. The domestic price ratio in the country is two units of bread per unit of cheese. D. Production of bread is relatively land-intensive in the country.