Holding nominal money balances constant, a decrease in the price level
A) causes the real value of the money balances to increase, thereby increasing the interest rate.
B) generates a reduction in the value of the money balances, leading to higher interest rates and a decrease in total planned real expenditures.
C) causes the real value of the money balances to increase, in turn increasing total planned real expenditures.
D) causes the real value of the money balances to decrease, in turn decreasing total planned real expenditures.
C
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Stagflation occurs when
A) inflation rises and GDP falls. B) inflation falls and GDP falls. C) inflation rises and GDP rises. D) inflation falls and GDP rises.
Maury did not work last week because fire forced an evacuation of his workplace. The Bureau of Labor Statistics counts Maury as
a. unemployed and in the labor force. b. unemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.
If a country has a trade surplus
a. it has positive net exports and positive net capital outflow. b. it has positive net exports and negative net capital outflow. c. it has negative net exports and positive net capital outflow. d. it has negative net exports and negative net capital outflow.
An expanding manufacturer hired employees at the prevailing wage and saw profits rise. The firm continued adding employees, even though production barely increased with the latest round of hires. Which of the following explains how profits will be affected by further hiring?
a. Adding workers will improve marginal productivity. b. Additional workers will not increase profits. c. Total output will improve, so profits will increase. d. Accounting profits will rise but not economic profits.