Along the classical or vertical range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
A. both the price level and real GDP.
B. only real GDP.
C. only the price level.
D. real GDP and reduce the price level.
Answer: C
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Suppose you cash in a Certificate of Deposit (a small time deposit) to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?
A) M1 and M2 both increase. B) M1 stays the same and M2 increases. C) M1 increases and M2 decreases. D) M1 increases and M2 stays the same.
In the short-run, a rise in the money wage rate leads to
A) an increase in the price level and an increase in real GDP. B) an increase in the price level and a decrease in real GDP. C) an increase in the price level, but no change in real GDP. D) no change in the price level, but an increase in real GDP.
In Keynes' concept of the liquidity trap,
A) monetary policy becomes more effective as interest rates fall below normal. B) people wish to hold more bonds as interest rates fall below normal. C) people wish to hold fewer bonds as interest rates fall below normal. D) there is a need for more liquidity in the banking system.
Which of the following statement(s) is true?
(a) All state legislatures acted to create corporations. (b) The federal government created the federal incorporated entities when it established the First (1791–1811) and Second (1816–1836) Banks of the United States. (c) All federal, state and local governments possessed the right to create corporations. (d) All of the above are true.