Which of the following is CORRECT? The demand for money
A) increases as real GDP increases.
B) decreases as the price level increases.
C) depends on the quantity of money.
D) increases when the nominal interest rate rises.
A
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called
A) unemployed workers. B) discouraged workers. C) unhappy workers. D) involuntarily unemployed. E) part-time lookers.
Smith's income was $50,000 in year 1 and $55,600 in year 2. The CPI was 114 in year 1 and 124 in year 2. What was the approximate percentage change in Smith's real income between the two years?
A) -2.2 percent B) +3.4 percent C) -1.7 percent D) +5.6 percent E) +2.2 percent
Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase?
a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.