The real-balances effect on aggregate demand suggests that a:
A. Lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending
B. Lower price level will decrease the real value of many financial assets and therefore cause an increase in spending
C. Lower price level will increase the real value of many financial assets and therefore cause an increase in spending
D. Higher price level will increase the real value of many financial assets and therefore cause an increase in spending
C. Lower price level will increase the real value of many financial assets and therefore cause an increase in spending
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Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from
A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.
The fact that monopoly and monopsony exist in resource markets means that:
A. the marginal productivity theory of income distribution is valid. B. resource prices do not always measure contributions to output. C. the resulting income distribution is ethically correct. D. income shares do not exhaust the total output.
What impact would the Fed's raising the interest rate have on any inflationary pressure in the economy?
A. An increase in interest rates decreases the money demand, which could slow increases in the price level. B. An increase in interest rates increases the money supply, which could cause the price level to increase. C. An increase in interest rates decreases the exchange rate, which causes net exports to rise, generating inflation. D. An increase in interest rates increases real GDP, which creates inflation in an economy.
Human capital increases with college education.
Answer the following statement true (T) or false (F)