The "direct effect" of an increase in the money supply is to
A) increase aggregate demand as people spend their excess money balances.
B) increase aggregate demand as interest rates fall and investment spending increases.
C) increase aggregate supply as producers anticipate higher future profits.
D) decrease the rate of inflation.
A
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A utility function
A) needs to measure the absolute level of happiness. B) needs to measure relative amounts of happiness for a single individual. C) helps compare the relative happiness of two separate consumers. D) is most useful if it can be influenced by others.
Economic analysis is used
A) only in economics classrooms. B) only by business people. C) only by policy makers. D) in all decision making.
Firm A producing one good acquires another firm B producing another good. The cross price elasticity of demand for the goods owned by each firm is 2.6 . Holding other things constant, the acquiring firm should
a. Raise prices on both goods b. Lower prices on both goods c. Raise price on the acquired good only d. Need more information
In the Keynesian model, investment, government spending, and net exports are treated as autonomous expenditures, which means they are independent of:
a. expectations. b. the price level. c. political processes. d. real GDP.