In Figure 17-3 above, suppose we are working under the assumption of the Lucas model. The Fed has been following an announced policy of "zero money growth for an indefinite period
" Suddenly and without warning it produces positive money growth and a "money surprise." This would result in a movement between points A) A and C.
B) A and B.
C) D and B.
D) D and A.
E) A and D.
A
You might also like to view...
Which of the following is a determinant of Investment spending?
A. Real income B. Expected future income C. Taxes D. Wealth
Mandy purchases 68.2 shares of a mutual fund for $1,500 . Cassie's purchase of these shares contributes $1,500 to which magnitude in the identity Y = C + I + G?
a. C b. I c. G d. None of the above are correct.
In making an investment decision, an entrepreneur
A. Must take account of diminishing returns to fixed factors. B. Makes a shutdown decision if price is below average variable cost. C. Decides the level of output to produce. D. Treats all costs as variable.
When a firm is hiring an input such that the marginal revenue product of the input is equal to the marginal factor cost of the input, the firm
A. is maximizing economic profit. B. is hiring too little of the input. C. should be expanding output. D. is producing too much output.