Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; higher
C. lower; higher
D. higher; potential
Answer: D
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There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run
A) increase; decrease to its initial value B) decrease; decrease further C) decrease; increase to its initial level D) increase; increase further
A model that is composed of many equations that show the channels through which monetary and fiscal policy affect aggregate output and spending is called a
A) reduced-form model. B) median-voter model. C) informed median-voter model. D) structural model.
In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25 connections or inspect 20 parts in an hour
A) Jane has a comparative advantage over Jim in both soldering and inspecting. B) Jane has a comparative advantage over Jim in soldering while Jim has a comparative advantage in inspecting. C) Jim has a comparative advantage over Jane in soldering while Jane has a comparative advantage in inspecting. D) Jim had a comparative advantage over Jane in both soldering and inspecting.
An experienced software engineer starts a new job with a pay package that is 14 percent higher than her previous salary. The expected inflation in the economy is 10 percent. However, the actual inflation in the following year turns out to be 14 percent. Which of the following costs of inflation did she have to bear?
a. Menu costs b. Shoe-leather costs c. Unit-of-account costs d. Time costs