The new classical model states that a
a. budget surplus will effectively retard inflation that comes from excess demand.
b. budget deficit will have no impact on real interest rates.
c. budget deficit will increase the real interest rate.
d. substitution of debt for tax financing will increase aggregate demand and real output.
B
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Refer to Figure 14-4. How will Rainbow Writer respond to Odeon's two possible offers?
A) Rainbow Writer will only accept an offer of $30 per copy of the software package. B) Rainbow Writer will only accept an offer of $40 per copy of the software package. C) Rainbow Writer will reject either offer. D) Rainbow Writer will accept either offer.
If consumer purchases of a good are highly sensitive to the price of the good, this is illustrated by a
What will be an ideal response?
Please refer to the following diagram. 
A horizontal interpretation of the demand curve for a product
A. stipulates price as the independent variable in the price quantity relationship. B. indicates that a buyer can buy all she/he wants to buy at a given price. C. indicates that a seller can sell all he/she wants to sell at the given price. D. tells what prices would be required to sell various quantities of output.
For this question, assume that the Phillips curve equation is represented by the following equation: ?t - ?t-1 = (m + z) - ?ut. Given this information, the natural rate of unemployment will be equal to
A) m + z. B) (m + z - ?). C) ?(m + z). D) 0. E) none of the above