In a world of rational expectations,
A) an anticipated increase in money supply leads immediately to higher nominal interest rates.
B) an anticipated increase in money supply leads immediately to lower nominal interest rates.
C) an unanticipated increase in money supply leads immediately to higher nominal interest rates.
D) an unanticipated decrease in money supply leads immediately to lower nominal interest rates.
A
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The point of tangency between a consumer's budget constraint and his or her indifference curve represents
a. complete satisfaction for the consumer. b. the equivalence of prices the consumer pays. c. constrained utility maximization for the consumer. d. the least he or she can spend.
In an open economy, an increase in foreign output would cause the IS curve to shift ________ and a decrease in the foreign real interest rate would cause the IS curve to shift ________.
A. down; down B. down; up C. up; up D. up; down
A boom in the stock market affects the economy because
A. wealth of consumers grows as stock prices increase. B. firms invest more as demand grows. C. consumers consume more as stock prices increase. D. all of the above.
In their pure forms, laissez-faire economies and command economies do not exist in the world.
Answer the following statement true (T) or false (F)