The interest-rate effect suggests that:
A. a decrease in the supply of money will increase interest rates and reduce interest-sensitive
consumption and investment spending.
B. an increase in the price level will increase the demand for money, reduce interest rates,
and decrease consumption and investment spending.
C. an increase in the price level will increase the demand for money, increase interest rates,
and decrease consumption and investment spending.
D. an increase in the price level will decrease the demand for money, reduce interest rates,
and increase consumption and investment spending.
C. an increase in the price level will increase the demand for money, increase interest rates,
and decrease consumption and investment spending.
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The labor force divided by the working age population equals the:
A. participation rate. B. unemployment rate. C. population rate. D. employment rate.
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
In the United States from 1981 to 2013, deaths from all of the following declined substantially except
A) heart attacks. B) kidney disease. C) cancer. D) strokes.
The figure below depicts the IS-LM-FE model with floating exchange rates.
Following the shift of the economy from point A to point B, the shift of the FE curve from FE0 to FE1 was caused by
A. official intervention in the foreign exchange market. B. an improvement in current account position. C. an appreciation of the country's currency. D. a contractionary monetary policy.