Long-run aggregate supply corresponds to the level of potential output.

a. true
b. false


Ans: a. true

Economics

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If an increase in the growth rate of the money supply results in an equal increase in the rate of inflation with no effect on any real variables, we say that

A) the classical dichotomy fails. B) money is neutral. C) money is superneutral. D) money is the most preferred store of value.

Economics

Which of the following is a major area of disagreement between activists and nonactivists?

a. Activists believe discretionary macroeconomic policy can be applied in a manner that will enhance economic stability. Nonactivists disagree. b. Activists believe monetary policy is more potent than fiscal policy. Nonactivists disagree. c. Activists believe changes in monetary and fiscal policy exert their effects instantaneously. Nonactivists think they work only with a substantial lag. d. Nonactivists think macroeconomic policy is sometimes motivated by the pursuit of political gain. Activists disagree.

Economics

Answer the next question on the basis of the following consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 30 percent. All figures are in billions.AssetsLiabilities & Net WorthReserves$51  Checkable Deposits$140Loans109  Stock Shares130Securities100 Property10?Refer to the above data. The maximum amount by which the commercial banking system can expand the supply of money by lending is:

A. $23.1 billion. B. $27 billion. C. $15 billion. D. $30 billion.

Economics

A decrease in the price of a good will result in a decrease in supply.

a. true b. false

Economics