How do ratings agencies earn income?
What will be an ideal response?
They primarily earn income by charging firms and governments for their services.
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Suppose that nominal aggregate demand falls by 4 percent, and at the same time every marginal cost also falls by 4 percent. The importance of menu cost theory is that in this situation the price level ________, meaning that a recession ________
A) must fall by 4 percent as well, does not occur B) must fall by 4 percent as well, must occur C) still might not fall, may not occur D) still might not fall, may occur
A massive selling of domestic currency assets by domestic and foreign financial investors is called:
A. a speculative attack. B. protectionism. C. a currency revaluation. D. a currency devaluation.
In Figure 5.1, during the 1980-1990 time periods, real GDP was relatively constant but nominal GDP increased. This can be explained by
A. Lower average price levels. B. A decrease in production per capita. C. Inflation. D. Higher levels of production.
If the price level increases by 5 percent and the nominal wage increases by 3.5 percent, the real wage will decrease by 1.5 percent.
a. true b. false