Refer to the graph shown. Which of the following wage rates would be an effective price floor?
A. $3.50
B. $4.50
C. $7.25
D. $6.50
Answer: C
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Hughes and Cain (2011) talk about falling levels of investment during the Great Depression. What does the "investment" that they are talking about refer to?
(a) Engineering ideas behind the industry of the era (b) Money loaned by banks to consumers (c) Land, labor, and equipment used in production (d) Tools, equipment, machines, and buildings used in production
The nominal interest rate is equal to the real interest rate minus the anticipated inflation rate
a. True b. False Indicate whether the statement is true or false
When the Fed buys bonds in the open market, we can expect
A) bond prices and interest rates to fall. B) bond prices to rise and interest rates to fall. C) bond prices to fall and interest rates to rise. D) bond prices and interest rates to rise.
In practice, one of the principal problems with aggregate demand management is that
A. changes in aggregate demand cannot reduce unemployment. B. stabilization policies could increase aggregate demand too much and at the wrong times. C. changes in aggregate demand are highly inflationary. D. changes in aggregate demand do not affect output.