A decrease in interest rates can ________ the demand for stocks as stocks become relatively ________ attractive investments as compared to bonds
A) increase; more
B) decrease; less
C) decrease; more
D) increase; less
E) increase; similar
Answer: A
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The short-run aggregate supply curve shows that a change in inflation will cause (a) change(s) in ________
A) output B) potential output C) expected inflation D) price shocks E) all of the above
Changing the price of good Y will
A. only affect the demand for that good. B. have effects across some markets. C. keep prices down in all markets. D. have no effect.
Suppose current government spending decreases and that individuals expect future government spending to decrease. Given this information, in which of the following cases will output in the current period be more likely to increase?
A) Individuals consider only the short run effects of changes in future macro variables when forming expectations of future output and future interest rates. B) Individuals consider only the medium run effects of changes in future macro variables when forming expectations of future output and future interest rates. C) Individuals consider only the long run effects of changes in future macro variables when forming expectations of future output and future interest rates. D) The output effects will be the same in B and C.
How would an economist characterize the decision to change brands when the price of one’s preferred brand increases?
a. disloyal b. rare c. rational d. unnecessary