Suppose the economy consists of two distinct groups: wage earners and goods sellers. If the price level increases by 30 percent and real wages increase by 30 percent,
a. there will be no redistribution of purchasing power between goods sellers and wage earners
b. purchasing power will be redistributed from wage earners to goods sellers
c. purchasing power will be redistributed from goods sellers to wage earners
d. nominal wages will increase by 90 percent
e. nominal wages will decrease by 60 percent
C
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Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 20%. In the theoretical limit, the money supply could
A) decrease by $1 billion. B) increase by $1 billion. C) increase by $5 billion. D) decrease by $5 billion.
A change in government spending has a larger effect on income the
a. larger the elasticity of money demand. b. smaller the elasticity of money demand. c. steeper the LM curve. d. flatter the LM curve.
What are the main characteristics that make it more likely for a cartel to enforce agreements among participating members?
What will be an ideal response?
People maximize utility when they make the choices that provide the highest level of satisfaction
a. True b. False Indicate whether the statement is true or false