The activists believe that
A) the time required for flexible prices to bring the economy back to the natural rate of unemployment is relatively short.
B) the IS curve is relatively flat because of the broad range of assets whose demand is very sensitive to changes in the interest rate.
C) the time required for flexible prices to return the economy to the natural level of real GDP is intolerably long.
D) the severity of the Great Depression was primarily related to the large decline in the supply of money.
C
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The proposition that the price of a resource is expected to rise at a rate equal to the interest rate is called the
A) discounted present value. B) derived demand for productive resources. C) diminishing marginal revenue product. D) Hotelling Principle.
Applying neoclassical theory to the housing market, ________ cause a decrease in the user cost of housing
A) higher expected household incomes B) higher rates of household formation C) increases in the expected relative price of housing D) tighter constraints on mortgage financing
The income of consumers increases. and the wage rate in the DVD industry increases. As a result
A) the price of DVDs stays the same and the quantity sold can either increase or decrease, depending on whether the change in demand is greater than the change in supply. B) the price of DVDs increases and the quantity sold can either increase, decrease or stay the same depending on whether the change in demand was greater than the change in supply. C) the equilibrium quantity sold increases and price can either increase or decrease, depending on whether the change in demand is greater than the change in supply. D) the equilibrium quantity sold can either increase or decrease and the price can either increase or decrease, depending on whether the change in demand was greater than the change in supply.
Businesses in the United States cut their investment projects by $30 billion. If the MPC is 2, what will be the impact on the national income (Y)?
a. Y will fall by $15 billion. b. Y will fall by $30 billion. c. Y will fall by $60 billion. d. Y will fall by $120 billion.