The direct effect of an increase in the money supply is
A. people will save the money, causing an increase in bank deposits, causing interest rates to fall, and loans to expand.
B. people will spend the extra money, causing the aggregate demand curve to shift to the right and prices to rise, and causing the economy to go into recession.
C. people will save more money, causing a decrease in economic activity and a fall in prices.
D. people will spend the extra money, causing the aggregate demand curve to shift to the right, creating an increase in economic activity.
Answer: D
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Suppose the price of a product is $4 and the nominal wage that the firm must pay is $20. Then the firm's real wage is
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The amount of redistribution in the United States has increased considerably since 1968 . Over that same period, the percentage of households in poverty has _____
a. fallen b. risen c. remained constant d. fell until 1982 at which point it began rising again
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