An initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in a long-run equilibrium with
What will be an ideal response?
a higher price level but the same real GDP.
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The one thing that all less-developed countries have in common over the past 25 years is virtually zero or negative economic growth
Indicate whether the statement is true or false
A decrease in the growth rate of the money supply causes a short-run departure from the long-run equilibrium because:
A. nominal growth rates are sticky. B. inflation expectations adjust quickly. C. the SRAS curve is horizontal. D. prices and wages are sticky.
If the money multiplier is 8, the required reserve ratio is
A. 8%. B. 12.5%. C. 16%. D. 20%.
The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Employment will decrease by
A) 0 hours. B) 10 million hours per year. C) 20 million hours per year. D) 30 million hours per year.