When the economy's actual price level exceeds the expected price level in the short run:
a. the real wages of workers decline
b. the nominal wages of workers increase.
c. firms decrease output below the potential level.
d. the economy produces the natural rate of output.
e. cyclical unemployment in the economy falls to zero.
a
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In commercial banking operations, there is a trade-off between liquidity and profitability
a. True b. False Indicate whether the statement is true or false
When Germany increased fiscal spending and raised interest rates in the early 1990s,
A) economic growth increased throughout Europe. B) other countries were forced to raise interest rates to stay in the ERM. C) it was unsuccessful in supporting East Germany. D) it forced other countries to devalue their currencies.
Automatic stablizers
A. are not effective in influencing real GDP at any time. B. are only effective in influencing real GDP during normal times. C. are only effective in influencing real GDP at times of a recession. D. can influence real GDP at normal times and times of a recession.
Monitoring is often used by firms in an attempt to decrease
A) shirking. B) piece rates. C) adverse selection. D) signaling.