Suppose the economy is initially in short-run equilibrium and the Fed decreases the nominal money supply. If the price level remains constant, real GDP will ________ relative to potential GDP and the real interest rate will ________
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
C
You might also like to view...
After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?
a. Price will increase, and quantity will decrease. b. Price will decrease, and quantity will decrease. c. Price will decrease, and quantity will increase. d. Price will increase, and quantity will increase.
If the earnings of Chopo Co are lower than expected, the forecasts will be revised downward and the price of the company's stock will decline
a. True b. False Indicate whether the statement is true or false
If there is an economic profit in monopolistic competition, there is
a. an incentive for new firms to enter b. an incentive for existing firms to increase prices c. at least one firm engaged in advertising d. an incentive for existing firms to decrease prices e. the absence of product differentiation
Which of the following is an effect of monopsony?
a. Fewer workers will be hired. b. More workers will be promoted. c. Workers will receive higher wages. d. Workers will be more mobile.