An economy in long-run equilibrium experiences an increase in aggregate demand. According to the classical model,
A. the price level will increase, but real GDP will not change.
B. the price level and real GDP will increase at the same time.
C. the price level will increase, but real GDP will decrease.
D. the price level will rise first, then real GDP will increase.
Answer: A
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The expected real interest rate (r) is equal to
A) nominal interest rate minus inflation rate. B) nominal interest rate minus expected inflation rate. C) expected nominal interest rate minus inflation rate. D) nominal interest rate plus expected inflation rate.
Refer to the table below. Because the extent of variation in the price of the input is ________ in Country B compared to Country A, it is less risky to plan to purchase the input in Country ________.
The above table provides the probability distribution of price of an input next year in Country A and Country B.
A) lower; A
B) greater; A
C) greater; B
D) lower; B
If a country grows at an average rate of 5 % per year over a 5 year period, then its compounded growth rate over that period is roughly:
A. 27.6 %. B. 35.0 %. C. 32.7 %. D. 20.5 %.
The theory of consumer behavior assumes that consumers attempt to maximize:
A. the difference between total and marginal utility. B. total utility. C. average utility. D. marginal utility.