The interest-rate effect
a. depends on the idea that increases in interest rates increase the quantity of money demanded.
b. depends on the idea that increases in interest rates increase the quantity of money supplied.
c. is the most important reason, in the case of the United States, for the downward slope of the aggregate-demand curve.
d. is the least important reason, in the case of the United States, for the downward slope of the aggregate-demand curve.
c
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In 2002 - 2003, some McDonalds' franchise owners reported that profits were declining from selling the discounted items from the Dollar Menu. This suggests that:
A) those items are price elastic. B) those items are price inelastic. C) those items are price unitary elastic. D) none of the above.
One reason why an economy may not smoothly adjust to a macroeconomic shock is that
A) prices are flexible in the long run. B) prices are sticky in the short run. C) wages are sticky in the long run. D) prices and wages are sticky in the long run.
A decrease in taxes will shift aggregate demand to the _____, cause consumption to _____, and cause output to _____. Due to the crowding-out effect, investment will _____
Fill in the blank(s) with correct word
According to the possible trade-off example between warships and drinking water in the text, the policy question that should be considered in Malaysia is:
A. do the opportunity costs of the warships exceed their nominal costs? B. do the nominal costs of the warships exceed their real costs? C. do the benefits of the warships exceed their opportunity costs? D. do the real costs of the warships exceed their nominal costs?