According to the monetarist view and the equation of exchange, which of the following will occur because the Fed sells securities in the open market?
A. A decrease in real interest rates.
B. An increase in the price level.
C. A lower level of real output.
D. A decrease in nominal aggregate spending.
Answer: D
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Leakages in the circular flow model are
A) caused by people not acting rational. B) possible when unemployment exists. C) reflected in the vertical long-run aggregate supply curve. D) caused by people saving instead of spending.
Low levels of sales that cause low levels of investment spending is an example of a
a. vicious circle. b. virtuous circle. c. convergence circle. d. divergence circle.
) Are wages more flexible upward or downward? Explain what effect this has during a time of expansion and a time of recession.
What will be an ideal response?
A nation which has many active free markets in which profits motivate sellers and also has regulatory bureaucracies would be an example of
A. a free market. B. a centrally planned economy. C. a mixed economy. D. an equitable economy.