Most economists believe that classical macroeconomic theory is a good description of the economy
a. in neither the short nor long run.
b. in the short run and in the long run.
c. in the short run, but not in the long run.
d. in the long run, but not in the short run.
d
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Scarcity guarantees that
A) demands will exceed wants. B) wants will exceed demands. C) demands will be equal to wants. D) most demands will be satisfied.
Use consumer indifference curves and budget lines to illustrate the effects of an increase in income for a normal good and an inferior good (use two graphs). Be sure your diagrams are fully and correctly labeled.
What will be an ideal response?
If Joe receives an increase in his wage rate and decides to decrease his hours worked, the
A) substitution effect and the income effect must be equal. B) substitution effect must exceed the income effect. C) income effect must exceed the substitution effect. D) substitution effect must be zero.
Fluctuations in the demand for reserves cause the Fed to lose control over a monetary aggregate if the Fed targets
A) a monetary aggregate. B) the monetary base. C) an interest rate. D) nominal GDP.