Suppose the index of leading economic indicators begins to decline for several months. Which of the following economic events will likely follow?
a. A recession.
b. Severe inflation.
c. Greater employment.
d. Higher investment.
a
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The allocation of resources is efficient under an idealized free market system
a. True b. False Indicate whether the statement is true or false
Moving upward along an LM curve, ________ quantity of real money balances is equally demanded as higher real incomes are accompanied by ________ interest rates
A) an increasing, rising B) an increasing, falling C) a decreasing, falling D) a constant, rising E) a constant, falling
Other things being equal, suppose that the demand for wheat in constant quality units increases. The increase in demand will cause
A) a surplus of wheat. B) a higher equilibrium price and higher equilibrium quantity of wheat. C) fall in the market clearing price of corn, a substitute for wheat. D) a higher equilibrium quantity, but a lower equilibrium price of wheat.
If a large decrease in the cost of capital leads to a firm increasing the labor it uses
A. then the output effect outweighs the substitution effect. B. the substitution effect outweighs the output effect. C. the substitution and output effects are equal. D. there is no way to determine the relative strengths of the output and substitution effects.