What impact does a higher price level have on interest rates, wealth, and investment spending?
What will be an ideal response?
A higher price level reduces the purchasing power of wealth, increases interest rates, and reduces investment spending.
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Economists have found evidence that differences in wages can be explained by
a. experience b. job characteristics c. physical attractiveness d. All of the above are correct.
If the economy is experiencing inflation, then the most appropriate government policy would be to:
A. shift the aggregate demand curve by using a tax increase coupled with spending cuts. B. shift the aggregate demand curve by using a tax increase coupled with more spending. C. shift the aggregate demand curve by using a tax cut coupled with spending cuts. D. shift the aggregate supply curve by using a tax cut coupled with more spending.
Fiat money is money the government says is money.
Answer the following statement true (T) or false (F)
Which of the following is not correct about the money kept in transactions accounts?
A. It is backed by gold held by the government. B. It is part of the basic money supply. C. It permits direct payment to a third party. D. It is a good substitute for cash in many cases.