How does slow price adjustment, as assumed in Keynesian models, result in real economic variables being affected by nominal variables?
What will be an ideal response?
If an increase in the money supply enables consumers and businesses to spend more, producers will respond by raising output. To do so, they will increase their purchases of labor and other inputs, and increase investment. Prices and wages will rise, but not so much or so quickly as to prevent the increase in real output and investment. The real interest rate may change, or not, depending on the changes in saving, investment, and expected inflation. But, the quantity of saving and investment will increase.
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The increased use of credit cards leads to
A) no movement along the demand curve for money nor a shift in the demand curve. B) a leftward shift in the demand for money curve. C) a rightward shift in the demand for money curve. D) a movement downward along the demand for money curve. E) a movement upward along the demand for money curve.
Drug companies are allowed to be monopolists in the drugs they discover in order to
a. increase the availability of expensive but useful medications. b. increase the overall welfare of society through better health because drug companies continually produce better medications. c. encourage research. d. All of the above are correct.
Why is globalization becoming more of a worldwide phenomenon?
What will be an ideal response?
External costs are
A. borne by individuals other than those who incurred them. B. borne by the government but incurred by the public. C. another term for implicit costs. D. borne by the public but incurred by the government.