Suppose monetary neutrality holds and velocity is constant. A 4 percent increase in the money supply
a. increases the price level by more than 4 percent.
b. increases the price level by 4 percent.
c. increases the price level by less than 4 percent.
d. increases real GDP by 4 percent.
b
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Isoquants that are downward-sloping straight lines imply that the inputs
A) are perfect substitutes. B) are imperfect substitutes. C) cannot be used together. D) must be used together in varying proportions.
In the market for labor:
A. individuals make up the demand. B. firms create the supply. C. the price in the market is the wage. D. individuals are never paid above their productivity.
Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The real risk-free interest rate rises, and reserve-related (central bank) transactions become more negative (or less positive). c. The real risk-free interest rate and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Free trade with other countries allows poor nations the opportunity to exploit their comparative advantage in agricultural goods.
Answer the following statement true (T) or false (F)