Keynesians contend that in a recession caused by a decline in aggregate demand, a policy of increasing the nominal money supply would
A. not affect the position of the LM curve, because the real money supply would not change.
B. raise the level of aggregate demand, which would help return the economy to full-employment output.
C. shift the LM curve to left, which would help return the economy to full-employment output.
D. lower the level of aggregate demand, which would help return the economy to full-employment output.
Answer: B
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For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because
A) information about price changes is hard to come by for small sellers. B) price and marginal revenue are the same economic concepts. C) individual perfectly competitive firms cannot influence the market price by changing their output. D) the firm's total revenue cannot be changed by anything the firms can do. E) there are only a small number of firms in the market.
On the graph above, suppose point G is on the short-run aggregate supply curve ? = 2.5 + 2 × (Y - 22 ) and aggregate demand curve Y = 29.25 - 0.5?
If output at point G is 25, and inflation expectations are adaptive, then the inflation rate next period will be ________. A) 11.5 B) 14.5 C) 8.5 D) 2.5 E) none of the above
Every unit of good x that is produced in the United States is exported to other countries. An increase in the price of good x shows up
a. in the consumer price index and in the GDP deflator. b. in the consumer price index, but not in the GDP deflator. c. in the GDP deflator, but not in the consumer price index. d. in neither the consumer price index nor in the GDP deflator.
The PPP theory fails in reality for all of the following reasons EXCEPT
A) transport costs. B) monopolistic or oligopolistic practices in goods markets. C) the inflation data reported in different countries are based on different commodity baskets. D) restrictions on trade. E) inflation rates are unrelated to money supply growth.