The theory of liquidity preference postulates that the demand for real money balances, plotted against the interest rate, is:
a. vertical.
b. downward sloping.
c. horizontal.
d. upward sloping.
Answer: b. downward sloping.
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Nominal GDP in a given year is GDP
A) valued in the prices of the base year. B) valued in the prices of that year. C) adjusted for inflation. D) adjusted for the value of intermediate goods.
Structural unemployment is
A) associated with the changing of jobs in a dynamic economy. B) associated with general downturns in the economy. C) associated with changes in technology that change required job skills. D) very short-term unemployment.
If the United States is a "net borrower" from abroad,
A) national saving is less than domestic investment. B) net foreign investment must be positive. C) net capital flows must be negative. D) the United States must be exporting more than it is importing.
If the demand for a steak is unit elastic, then
A) the percentage change in quantity demanded is 100 percent greater than the percentage change in price (in absolute value). B) quantity demanded does not respond to changes in price. C) the percentage change in quantity demanded is equal to the percentage change in price. D) the percentage change in quantity demanded is 1 percent greater than the percentage change in price.