Collective bargaining agreements that prohibit wage cuts for the duration of the contract contribute to:
A. A wealth effect
B. A multiplier effect
C. An increase in aggregate supply
D. A price level that is inflexible downward
D. A price level that is inflexible downward
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The permanent income hypothesis implies that the effect of a temporary tax cut on economic activity
A) is greater than the effect of a permanent tax cut. B) is the same as the effect of a permanent tax cut. C) is smaller than the effect of a permanent tax cut. D) can be greater than or smaller than the effect of a permanent tax cut, depending on how the tax cut affects the government.
A fractional reserve banking system is one in which banks hold less than 100 percent of ________ as reserves
A) shareholder equity B) securities C) deposits D) loans
The ________ states that the nominal interest rate equals the real interest rate plus the expected rate of inflation
A) Fisher equation B) Keynesian equation C) Monetarist equation D) Marshall equation
Which of the following is not a characteristic of a perfectly competitive market?
a. There is a large number of small firms. b. Firms sell a homogeneous product. c. Firms can easily enter or exit the market. d. Firms are price makers, not price takers.