An individual holds $10,000 in a non-interest-earning checking account, and the overall price level rises significantly. Other things being constant, we would expect
A) the individual's real wealth to decrease and consumption to decline.
B) no change in the individual's real wealth but a decline in real national product.
C) the individual's stock of real wealth to decrease but real national income to increase.
D) the individual's wealth to increase.
A
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Would the Federal Reserve respond more aggressively with interest rate cuts in a recession caused by a decrease in spending, as in the 2001 recession, than in a recession caused by an increase in oil prices, as in the 1974-75 recession?
What will be an ideal response?
Total product begins to fall when:
A. average product is below zero. B. marginal product is maximized. C. marginal product is zero. D. average product is negative.
If workers and employers base their wages on an inflation forecast that turns out to be correct...
What will be an ideal response?
An appreciation of the dollar makes imported inputs cheaper and shifts the U.S. aggregate supply curve outward, thus pushing American prices down.
Answer the following statement true (T) or false (F)