According to Gordon, a major problem with Keynes' "rigid nominal wage" theory of the business cycle is
A) a horizontal LM curve.
B) it is not a market clearing theory.
C) falling real wages are not countercyclical with business activity or Y.
D) None of the above.
C
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Which of the following statements about the concept of opportunity cost is true?
A. The opportunity cost of a decision only includes monetary outlays. B. The opportunity cost of a decision is the next best foregone alternative. C. All decisions have zero opportunity cost. D. The opportunity cost of a college education is measured by the payments for tuition and books.
Based on these graphs, in both cases _____.
a. RGDP increases
b. RGDP decreases
c. price level increases
d. price level decreases
Contrast a fixed-rate exchange rate system and a flexible-rate exchange system in terms of a foreign currency shortage precipitated by an increase in U.S. demand for a foreign good.
What will be an ideal response?
Many developing countries face a balance of payments constraint because:
A. they fail to implement exchange rate policy correctly. B. they hold too few international reserves. C. they hold too many international reserves. D. the IMF forces them to adopt policies that are counterproductive.