The quantity theory of money argues that, in the long run (real GDP equals potential GDP), the percentage change in money will create an equal percentage change in
What will be an ideal response?
the price level.
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
Refer to the above figure. If real Gross Domestic Product (GDP) is $2 trillion, then
A) the level of total planned expenditures is less than real GDP. B) the level of total planned expenditures is greater than real GDP. C) the level of total planned expenditures equals real GDP. D) the level of total planned expenditures equals zero.
Why would acquiring 20,000 acres of land in Florida to build an amusement park be more difficult than acquiring 20,000 acres of land in Florida to grow oranges?
What will be an ideal response?
In the New Keynesian model, if there is a decrease in anticipated future total factor productivity, then
A) there should be no change in monetary or fiscal policy. B) the central bank's interest rate target should be increased. C) government spending should fall, and the central bank's interest rate target should rise. D) government spending should increase.