For this question, assume that the economy is initially operating at the natural level of output. A monetary expansion will cause
A) no change in the real wage in the medium run.
B) an increase in investment in the medium run.
C) a reduction in the interest rate in the medium run.
D) no change in the nominal wage in the medium run.
A
You might also like to view...
A barter economy refers to a situation in which goods and services are traded for other goods and services, with no money involved in transactions. The major shortcoming of a barter economy is
A) transactions cannot take place without money. B) the requirement of a double coincidence of wants. C) government has no way of collecting taxes. D) goods and services have no way of storing value.
When two goods are substitutes for each other, the cross price elasticity of demand
A) will be negative. B) will be zero. C) may be either positive or negative. D) will be positive.
If an economy uses its resources inefficiently, this situation would be illustrated on a production possibilities diagram as
a. an inward shift of the production possibilities curve. b. an outward shift of the production possibilities curve. c. operating at a point outside the production possibilities curve. d. operating at a point inside the production possibilities curve.
Which of the following statements about full employment is true?
A. Liberal economists insist that an unemployment rate of 4 percent constitutes full employment. B. Conservative economists feel that an unemployment rate of 6 percent is a realistic portrayal of full employment. C. Economists cannot agree on what constitutes full employment, thus 5% represents a reasonable compromise. D. All of these choices are true.