According to John Maynard Keynes
a. effective demand determines real GDP.
b. Say's Law is always correct.
c. a free market economy automatically finds equilibrium at full employment.
d. prices and wages move up and down freely.
e. supply creates its own demand.
a
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Barbara is willing to loan $10,000 if she can earn a real interest rate of 6 percent. Everything else the same, if the inflation rate is 2 percent, she would agree to loan the $10,000 if the nominal interest rate is ________ because ________
A) 8 percent or higher; she would not earn her desired amount of 6 percent if the nominal interest rate was any lower B) 4 percent or lower; she would not earn her desired amount of 6 percent if the nominal interest rate was any higher C) 8 percent; she would earn more than her desired amount of 6 percent D) 8 percent or lower; she would not earn her desired amount of 6 percent if the nominal interest rate was any higher E) 4 percent or higher; she would not earn her desired amount of 6 percent if the nominal interest rate was any lower
The public, by raising the currency-to-deposit ratio, ________ the deposit creation multiplier, ________ the money supply
A) raises, and raises B) raises, yet does not affect C) lowers, yet does not affect D) lowers, and lowers E) does not affect, yet raises
If a budget is cyclically balanced, the government should run a surplus when the economy experiences a contractionary gap
a. True b. False Indicate whether the statement is true or false
Explain how firms determine the right quantity of labor to employ.
What will be an ideal response?