Increases in the quantity of money can start a ________ inflation and an increase in government expenditure can start a ________ inflation
A) demand-pull; cost-push
B) cost-push; cost-push
C) cost-push; demand-pull
D) demand-pull; demand-pull
E) None of the above is correct because increases in the quantity of money are necessary to continue an inflation but cannot start an inflation.
D
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Suppose the money demand of individuals and firms depends on what they perceive to be the probabilities that the economy will expand or contract over the following six months
Suppose their money demand is given by the equation L = 0.5Y - 100i + 20z, where z is the probability that the economy is expanding six months in the future. If z = 1, the economy will certainly be in recovery, if z = 0, the economy will certainly be in recession, and for z between 0 and 1 there is some uncertainty about the future state of the economy. Use a classical (RBC) model of the economy. If the Fed moves the money supply to target the price level, how does the money supply relate to the expected future state of the economy? Is this an example of reverse causation?
Why is the short-run demand curve for labor downward sloping?
What will be an ideal response?
First movers
A) are usually firms with large market share. B) are the first to bring out a new product. C) usually copy successful products. D) are mainly found in the computer industry. E) have memorable trade names.
If the government wishes to increase GDP by $1,200b, and the MPC is 0.8, it should:
A. increase its spending by $960b. B. increase its spending by $240b. C. decrease its spending by $240b. D. decrease its spending by $960b.