In the Keynesian model in the long run, a decrease in the money supply will cause
A. a decrease in output and an increase in the real interest rate.
B. a decrease in the real interest rate and a decrease in output.
C. an increase in the real interest rate but no change in output.
D. no change in either the real interest rate or output.
Answer: D
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The table below represents Freedonia's macroeconomic data for Year 1 and Year 2. Suppose that the production function is given by Y = AK0.25N0.75. Between Year 1 and Year 2, total factor productivity of Freedonia's economy increased by
A) -1.5%. B) 5.0%. C) 5.5%. D) 12.7%.
In the absence of trade between the two countries, the price of rice in the U.S. in terms of radios would tend to be
A. 1/2.
B. 1/5.
C. 200.
D. 500.
Which statement is TRUE? Fixed costs
A) do NOT exist in the long run. B) depend on the firm's level of output. C) are zero if the firm is producing nothing. D) are the difference between total costs and average variable costs.
Suppose that only one curve shifts. If you observe that the equilibrium price and equilibrium quantity increased, then the market experienced a(n):
A. decrease in supply. B. increase in demand C. increase in supply. D. decrease in demand.