Suppose the price level falls. The result is that the:
A. aggregate supply curve would shift to the right.
B. aggregate supply curve would shift to the left.
C. general price level would rise causing a movement up the aggregate demand curve.
D. aggregate demand curve would slope downward because of the real balances effect.
Answer: D
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According to the purchasing power parity theory, in the long run
a. the exchange rate between any two currencies should be equal all over the world b. the value of the dollar should equal the value of the pound which should equal the value of the yen c. inflation rates should equalize around the world d. interest rates should equalize around the world e. the exchange rate between the Canadian dollar and the British pound should reflect differences in price levels between Canada and Britain
A banking system that provides people immediate access to their deposits, but that allows banks to hold only a portion of those deposits on reserve, is known as:
a. an excess reserve system. b. a fractional reserve system. c. the Fed. d. the FDIC. e. an asset-based system.
In 2013, the lowest incidence of poverty was for
A. women living in households with no husband present. B. children under 18. C. individuals over 65. D. white (non-Hispanic) people.
For a given nominal exchange rate and foreign price level, an increase in the domestic price level ________ the real exchange rate.
A. offsets any change in B. increases C. may either increase or decrease D. decreases