One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired.
B. prices tend to adjust more quickly downward than upward.
C. wages are sticky downward.
D. input prices increase with output prices.
Answer: C
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Suppose the Fed pursues a policy that leads to higher interest rates in the United States. How will this policy affect real GDP in the short run if the United States is an open economy? This policy
A) reduces investment spending and consumption spending, both of which reduce GDP. Net exports fall which increases GDP. B) increases investment spending, consumption spending, and net exports, all of which increase GDP. C) reduces investment spending and consumption spending, both of which reduce GDP. Net exports rise which increases GDP. D) reduces investment spending, consumption spending and net exports, all of which reduce GDP.
The above figure shows the market for rice in Japan. SDomestic represents the domestic supply curve, and Sworld represents the world supply curve. The smallest tariff necessary to completely eliminate imported rice is
A) $1 per unit. B) $25 per unit. C) $50 per unit. D) Not enough information.
If a commercial bank has liabilities valued at $150 million, a net worth of $50 million and assets (not including loans) of $180 million, what is the value of the bank's loans?
a. $180 million b. $200 million c. $20 million d. $280 million e. $80 million
An increase in the price level will
A) shift the aggregate demand curve to the left. B) shift the aggregate demand curve to the right. C) move the economy up along a stationary aggregate demand curve. D) move the economy down along a stationary aggregate demand curve.