Which of the following is correct?
A. The effect of a compensated price change equals the effect of an uncompensated price change plus the effect of providing compensation.
B. The effect of a compensated price change equals the effect of an uncompensated price change plus the effect of removing compensation.
C. The effect of an uncompensated price change equals the effect of an uncompensated price change plus the effect of providing compensation.
D. The effect of a compensated price change equals the substitution effect of the price change plus the income effect of the price change.
A. The effect of a compensated price change equals the effect of an uncompensated price change plus the effect of providing compensation.
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The practice of borrowing short and lending long
A) pools risk. B) minimizes the cost of monitoring borrowers. C) creates liquidity. D) All of the above answers are correct.
Suppose the U.S. economy is producing at the natural rate of output. A depreciation of the U.S. dollar will cause ________ in real GDP in the short run and ________ in inflation in the short run, everything else held constant
(Assume the depreciation causes no effects in the supply side of the economy.) A) an increase; an increase B) a decrease; a decrease C) no change; an increase D) no change; a decrease
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.
According to Adam Smith, what is the primary source of a nation's wealth?
A. the amount of gold and silver in the government's possession B. a spirit of cooperation in which people share according to their means C. strong central planning authorities D. the people's ability to produce products and trade in free markets