As a result of "money illusion," people:
A. tend to be more upset by a decrease in their real wage than by a decrease in their nominal wage.
B. tend to be more upset by an increase in their nominal wage than by a decrease in their real wage.
C. tend to be more upset by a decrease in their nominal wage than by a decrease in their real wage.
D. tend to be more pleased with an increase in their real wage than by an incre
Ans: C. tend to be more upset by a decrease in their nominal wage than by a decrease in their real wage.
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What will be an ideal response?
Which of the following reduced the effectiveness of the Fed's low interest rate policy during the aftermath of the 2008-2009 recession?
a. The heavy indebtedness of households. b. The reduction in the earnings derived from savings accounts, certificates of deposits, and other forms of savings used by many Americans. c. The increased fear of inflation fueled by the Fed's expansionary monetary policy. d. All of the above.
Figure 17-8
Refer to . The horizontal line at the world price of wagons represents the
a.
demand for wagons from the rest of the world.
b.
supply of wagons from the rest of the world.
c.
level of inefficiency in the domestic market caused by trade.
d.
surplus in the domestic wagon market.
The political business cycle refers to the possibility that:
A. incumbent politicians will be reelected regardless of the state of the economy. B. politicians will manipulate the economy to enhance their chances of being reelected. C. there is more inflation during Democratic administrations than during Republican administrations. D. recessions coincide with election years.