Samuelson and Solow argued that when unemployment is high,
a. aggregate demand is high, which puts upward pressure on wages and prices.
b. aggregate demand is high, which puts downward pressure on wages and prices.
c. aggregate demand is low, which puts upward pressure on wages and prices.
d. aggregate demand is low, which puts downward pressure on wages and prices.
d
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as:
a. unstable. b. relatively inelastic. c. relatively elastic. d. of unitary elasticity.
Which statement is true?
A. One of the functions of money is that it serves as a receipt for gold. B. The most important function of money is that it serves as a medium of exchange. C. Barter requires specialization. D. None of the statements are true.
ABC Corp. is considering an investment project that costs $500 today. It expects the project will yield income of $200 at the end of years 1, 2, and 3. If the interest rate is 10%, the firm
A. should forgo the investment. B. is just indifferent between undertaking the investment and not. C. should undertake the investment. D. indeterminate from the given information