Explain the logic according to liquidity preference theory by which an increase in the money supply changes the aggregate demand curve
When the money supply increases, the interest rate falls. As the interest rate falls people will want to spend more and firms will want to build more factories and other capital goods. This increase in aggregate demand happens for any given price level, so aggregate demand shifts right.
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An open economy is one in which exports and imports constitute a large share of GDP.
Answer the following statement true (T) or false (F)
Rising healthcare costs are attributable to
A) people living longer and desiring more care. B) reliance on expensive technology to support and prolong life. C) third-party financing of healthcare costs. D) all of the above
Which of the following points out that even if most workers were hypothetically willing to see a decline in their own wages in bad economic times as long as everyone else also experiences such a decline, there is no obvious way for a decentralized economy to implement such a plan?
a. efficiency wage theory b. relative wage coordination argument c. adverse selection of wage cuts d. insider-outsider model
What effect does new technology usually have on an economy?
What will be an ideal response?