A 10% decrease in real income usually leads to ________ in money demand
A) an increase
B) no change
C) a decrease of less than 10%
D) a decrease of 10%
C
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Demand-side inflation occurs when
A) long-run aggregate demand rises faster than short-run aggregate supply. B) aggregate demand falls more rapidly than aggregate supply. C) increases in aggregate supply outstrip increases in aggregate demand. D) increases in aggregate demand are not matched by increases in aggregate supply.
A current account surplus
A) poses a problem if domestic savings are being invested more profitably abroad than they would be at home. B) may pose no problem if domestic savings are being invested more profitably abroad than they would be at home. C) may pose no problem if domestic savings are being invested less profitably abroad than they would be at home. D) there is no relation between current account surplus and between savings and investment. E) poses a problem if domestic savings are being invested less profitably abroad than they would be at home.
Suppose C = 1000 + .9Y, G = 400, I = 100, (X – IM) = 0, and there are no income taxes. The equilibrium level of national income is
a) 15,000 b) 13,500 c) 1,500 d) 5,000 e) 4,500
Perfectly competitive firms maximize their profit by producing the output level where P = MR = AVC.
Answer the following statement true (T) or false (F)