Suppose the demand for money is not very sensitive to the interest rate. Given this information, we know that
A) the IS curve should be relatively flat.
B) the IS curve should be relatively steep.
C) the LM curve should be relatively flat.
D) the LM curve should be relatively steep.
E) neither the IS nor the LM curve will be affected.
D
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If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until
A) all consumers will be able to afford the product. B) the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. C) quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price. D) quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
In a one-period valuation model, a decrease in the required return on investments in equity causes a(n) ________ in the ________ price of a stock
A) increase; current B) increase; expected sales C) decrease; current D) decrease; expected sales
A primary difference between the original and New Keynesian approaches is that in the original model nominal wages are ________, while for the New Keynesians nominal wages are ________
A) perfectly flexible, slow to adjust B) slow to adjust, perfectly flexible C) fixed, slow to adjust D) slow to adjust, fixed
If the price elasticity of demand for a good is greater than one in absolute value, economists characterize that demand is
A) elastic. B) inelastic. C) perfect. D) vertical.