Wage and price stickiness causes
A. changes in aggregate demand to have short-run effects on real Gross Domestic Product (GDP).
B. changes in aggregate demand to have no short-run effects on real Gross Domestic Product (GDP).
C. changes in aggregate demand to have long-run effects on real Gross Domestic Product (GDP).
D. changes in aggregate demand to have both short-run and long-run effects on real Gross Domestic Product (GDP).
Answer: A
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The Laffer curve
A) initially slopes upward as increasing tax rates lead to increasing tax revenue but eventually will slope downward as increasing tax rates lead to decreasing tax revenue. B) slopes upward throughout its range since increasing tax rates will always lead to increases in tax revenue. C) is horizontal because tax revenue is independent of the rate of interest. D) slopes downward throughout its range since increasing tax rates will always lead to decreases in tax revenue.
In the above figure, the economy is at point A. Then the price level falls to 90 while the money wage rate does not change. Firms will be willing to supply output equal to
A) less than $16.0 trillion. B) $16.0 trillion. C) more than $16.0 trillion. D) Without more information, it is impossible to determine which of the above answers is correct.
After the Fed makes an open market purchase of bonds, the deposit-creation process may continue only to the point where
a. the Fed reverses course and sells bonds b. the Fed changes the required reserve ratio c. all excess reserves have been converted into required reserves d. all required reserves have been converted into excess reserves e. the Fed raises interest rates
If the length of time from the market-day supply to the long-run supply is ordered from the shortest to the longest time span for the number of new Subway sandwich franchises, board-feet of walnut lumber, teenage workers at amusement parks in the summer, and pounds of tomatoes at a summertime farmers' market we would have
a. pounds of tomatoes, teenage workers, Subway franchises, walnut lumber b. teenage workers, Subway franchises, walnut lumber, pounds of tomatoes c. Subway franchises. walnut lumber pounds of tomatoes d. teenage workers, pounds of tomatoes, Subway franchises, walnut lumber e. pounds of tomatoes, teenage workers, Subway franchises, walnut lumber