Demand-pull inflation results from continually increasing the quantity of money, which leads to continually
A) decreasing potential GDP.
B) increasing potential GDP.
C) increasing aggregate supply.
D) decreasing aggregate demand.
E) increasing aggregate demand.
E
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Refer to the figure above. What is the quantity effect of a price reduction from $6 to $4?
A) $600 B) $800 C) $1,000 D) $1,200
In the short run in the Keynesian model, a sharp decline in oil prices would leave the economy with a ________ level of output and a ________ real interest rate
A) higher; lower B) lower; higher C) lower; lower D) higher; higher
A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7 . Assume that the economy is initially in equilibrium. What will happen to the equilibrium real GDP if a tourist visits the country and spends $100 that she brought with her?
a. It will not change. b. It will increase by $100. c. It will increase by $200. d. It will increase by $143. e. It will increase by $90.
Education raises wages because the demanders of labor
a. are willing to pay more for highly educated workers who have higher marginal products and the suppliers of labor are willing to pay the cost of becoming educated only if they are rewarded. b. are willing to pay the cost of becoming educated only if they are rewarded and the suppliers of labor are willing to pay more for highly educated workers who have higher marginal products. c. require fewer workers if they are highly educated. d. None of the above is correct.