Which of the following is an implication of the classical model?
a. The supply of loanable funds curve is downward sloping.
b. The inflation rate is constantly rising.
c. Fiscal policy only changes the amount of consumption, investment and government spending, not the amount of output produced.
d. Monetary policy can change both the interest rate and real output.
e. The interest rate can only be changed by monetary policy, not by changes in government spending.
C
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High rates of saving today contribute to ________ in the future.
A. more capital gains B. a higher standard of living C. more unemployment D. higher tax rates
Consumption smoothing refers to ________
A) the impact of future income on current consumption and of current income on future consumption B) the constancy of consumption over time C) the impact of current consumption on future income and of future consumption on current income D) the tendency of consumers to adopt similar spending habits
According to the text, why would firms in an industry follow the price leadership of another firm?
a. fear of retribution from the price leader if they don't follow b. smaller firms do not have the resources to determine optimal price c. the price chosen by the leading firm is the optimal one for all d. profit will be distributed in accordance with firms' market share e. every firm in the industry has confidence the leading firm will act for the benefit of all firms
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.