How will an unanticipated decrease in aggregate demand influence equilibrium output in the goods and services market?
What will be an ideal response?
Output will decrease, and the general level of prices will fall.
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Which of the following would shift the AS curve downward?
a. A decrease in the price level b. A decrease in world oil prices. c. An increase in world oil prices. d. A natural disaster that raises unit costs for all firms. e. A loss of technological capability.
The Federal Reserve may choose to monetize the debt in order to
a. reduce the burden of the national debt. b. shift the supply curve of money outward. c. shift the demand curve for money inward. d. reduce the volume of reserves in commercial banks.
?A standard linear model which is supposed to measure a causal relationship is called a structural equation.
Answer the following statement true (T) or false (F)
Suppose the U.S. one-year interest rate is 3% per year, while a foreign country has a one-year interest rate of 5% per year. Ignoring risk and transaction costs, a U.S. investor should invest in foreign bonds as long as the expected yearly rate of depreciation of the foreign currency is
A) less than 5%. B) greater than 5%. C) greater than 2%. D) less than 2%. E) less than 1%.