As prices rise, consumers and businesses will want to hold larger money balances. This will lead to
a. a reduction in the demand for resources and reduced resource prices.
b. an increase in the amount of goods and services demanded due to the real balance effect.
c. an increase in exports due to the international substitution effect.
d. a reduction in the supply of loanable funds and an increase in the interest rate.
D
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Which of the following is NOT associated with the new Keynesian economics?
A) small-menu cost theory B) market-clearing models to explain business cycles C) inflation dynamics D) sticky-price theories of real GDP determination
Households increase the quantity of labor supplied when the
A) real wage rate rises because the opportunity cost of not working rises. B) income tax rises because an increase in the income tax increases the demand for labor. C) nominal wage rate falls because the opportunity cost of not working rises. D) nominal wage rate rises because the real wage rate must also rise. E) real wage rate rises because the opportunity cost of not working falls.
Refer to the information provided in Table 21.1 below to answer the question(s) that follow. Table 21.1
Refer to Table 21.1. The value of gross domestic product in billions of dollars is
A. 3,000. B. 3,075. C. 3,125. D. 3,750.
Refer to the diagram. If the price level rises above P 1 because of an increase in aggregate demand, the:
A. economy will move up along curve B and output will temporarily increase.
B. long-run aggregate supply curve C will shift upward.
C. short-run aggregate supply curve B will automatically shift to the right.
D. economy's output first will decline, then increase, and finally return to Q 1.