Suppose the economy was in equilibrium, and the central bank increased the money supply by an expected amount equal to $100 billion. Monetarist theory would predict that the:
a. Long-term real GDP growth will rise.
b. Long-term real GDP growth rate will fall.
c. Long-term real GDP growth rate will remain unchanged.
d. Long-term inflation rate will fall.
e. The international value of the domestic currency will rise.
.C
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Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000. If the minimum wage is set at $7.50 per hour, then the
A) quantity of apricot pickers employed increases. B) quantity of apricot pickers employed decreases. C) quantity of apricot pickers employed does not change. D) wage rate for apricot pickers decreases. E) quantity of apricot pickers demanded does not change, and the quantity of apricot pickers supplied does not change.
The market demand curve for a good shows ________ and the market supply curve shows ________
A) consumers' willingness to pay for the good; producers' marginal cost of producing the good B) producers' marginal cost of producing the good; consumers' willingness to pay for the good C) consumers' willingness to pay for the good; the opportunity cost of producing the good D) consumers' willingness to pay for the good; producers' total cost of producing the good
Firm X both produces automobiles and owns gas stations. If decides to decrease the gas to induce higher sales for the automobiles, it means that
a. the gas and the automobiles are complements b. the gas and the automobiles are substitutes c. the gas and the automobiles are not related in demand d. none of the above
According to rational expectations theory,
a. there is absolutely nothing government can do, even in the short run, to reduce the economy's unemployment rate. b. the government can use fiscal policy such as increased government spending or lower tax rates to reduce unemployment. c. a modern extension of Keynesian economics exists. d. discretionary fiscal policy is essential for prolonged growth. e. market participants can be fooled in the long run by monetary and fiscal policy rules.