Which of these changes is observed in an economy when a recessionary gap is closed in the long run?
a. An increase in the inflation rate and a decrease in the unemployment rate
b. An increase in the level of output and a decrease in the price level
c. An increase in both the rate of output and the price level
d. A decrease in both the rate of output and the price level
e. A decrease in the inflation rate and an increase in the unemployment rate
b
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Housing is the largest component of the U.S. CPI market basket
Indicate whether the statement is true or false
Fluctuations in Tobin's q are ________, because ________
A) frequent and substantial; asset prices are volatile B) frequent and substantial; replacement costs are volatile C) infrequent and mild; replacement costs are relatively stable D) infrequent and mild; the marginal product of capital does not change quickly
As the interest rate rises, the present value of a given perpetual stream of income
A) increases. B) decreases. C) does not change. D) approaches infinity.
Which of the following is most likely to be used as a measure of the velocity of money in the country of Versovia?
a. Citizens earning about $100,000 per annum b. The average cost of a vacation in the country being $1,000 c. Citizens saving more than 10 percent of their annual income d. Citizens spending about $10,000 annually on an average on vacations