A theory suggesting that price stickiness leads to sluggish short-run adjustment of the price level to variations in aggregate demand is known as
A. real-business-cycle inflation dynamics.
B. real-business-cycle fixed-price business cycles.
C. new Keynesian flexible-price business cycles.
D. new Keynesian inflation dynamics.
Answer: D
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To increase future living standards by pursuing higher current rates of investment spending, an economy must:
A. reduce the current capital stock. B. allow higher rates of current consumption. C. reduce current rates of consumption spending. D. decrease the amount of future research and development spending.
The economic growth rate is measured as the
A) amount of real GDP. B) annual percentage change of the population. C) amount of population. D) annual percentage change of real GDP. E) annual percentage change of employment.
Which of the following is NOT an economic benefit of depository institutions?
A) They borrow long and lend short. B) They create liquidity. C) They pool risk. D) They reduce the cost of monitoring borrowers.
When the government cuts taxes or increases government spending
A) the long-run aggregate supply curve shifts to the left. B) the short-run aggregate supply curve shifts to the left. C) the aggregate demand curve shifts to the left. D) the aggregate demand curve shifts to the right.