The reason why inflation reduces the value of the multiplier is that part of the change in demand is
a. absorbed by price changes.
b. saved rather than spent.
c. matched by changes in supply.
d. matched by changes in income.
a
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The addition of government to the circular-flow model illustrates that government
A. purchases goods in the product market. B. provides services to businesses and households. C. purchases resources in the resource market. D. does all of these.
If prices of both horizontal and vertical goods increase by 50%,
A) budget constraint will be unchanged. B) slope of the budget constraint stay the same. C) slope of the budget constraint will decrease. D) budget constraint will shift outward in a parallel fashion.
An exchange rate is
a. the rate at which goods are traded between countries b. the rate of the net difference between exports and imports c. the denomination of currency used to purchase imports d. the price of one currency in terms of another e. the price at which one good trades for another
According to the loanable funds model, in the short run, contractionary monetary policy shifts the _____ curve for loanable funds to the _____.
A) demand; right B) supply; right C) demand; left D) supply; left