When the nominal price of a good increases over time, must its real price also increase?
What will be an ideal response?
No, even though the nominal price of a good increases, its real price might decrease. For instance, the nominal price of motorcycles has increased between 1970 and 2010, but their real price has decreased because the CPI increased even more rapidly.
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The most important determinant of any multiplier in the Keynesian model is
a. the level of planned investment. b. the level of unemployment. c. the marginal propensity to consume. d. the level of excess demand.
When a country adds more capital to its existing stock:
A. it experiences rapidly increasing rates of growth. B. the additional productivity is less than the previous increases to productivity. C. it experiences rapid declines in its level of income. D. the additional productivity is more than the previous increases to productivity.
Here's a taste of economic history: in the United States, the government's Office of Price Administration (OPA) introduced a rationing system in
a. 1929 b. 1932 c. 1942 d. 1967 e. 1973
Tax cuts would have the same directional effect on the dynamic aggregate demand curve as:
A. decreases in government purchases. B. temporary tax increases. C. the Federal Reserve selling U.S. treasury securities. D. the Federal Reserve buying U.S. treasury securities.