When the price level declines
A. the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve.
B. interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left.
C. the interest rate is not affected, so there is no movement along the aggregate demand curve.
D. the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve.
Answer: A
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In a steady state
A) both consumption per worker and the capital—labor ratio are constant. B) consumption per worker is constant, but the capital—labor ratio can change. C) capital and labor, by definition, are inversely related to one another. D) consumption per worker can change, but the capital—labor ratio is constant.
Something that would cause the long-run aggregate supply curve to shift to the right would be:
A. technological advance. B. increase in the growth rate of the labor force. C. discovery of a new oil reserve. D. All of these would shift the long-run aggregate supply curve to the right.
What is moral hazard?
Fill in the blank(s) with the appropriate word(s).
When there is an excess quantity of a product supplied, there will be
A. incentives for consumers to leave the market. B. upward pressure on the price of labor. C. a tendency for price of the product to fall. D. a tendency for price of the product to increase.