If goods A and B are complements, and if the price of good B rises, how will this affect the market equilibrium for good A?
a. Price will rise and quantity will fall.
b. Price will fall and quantity will rise.
c. Price and quantity will both rise.
d. Price and quantity will both fall.
d
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The M2 measure of money consists of the sum of
A. M1, checking and savings deposits, and currency. B. M1, savings deposits, small time deposits, and money market mutual funds. C. savings deposits, small time deposits, and money market mutual funds. D. currency, checking and savings deposits, and small time deposits.
According to economists Robert Lucas and Thomas Sargent, when are the gains to accurately forecasting inflation highest?
A) when inflation is high and stable B) when inflation is moderate but stable C) when inflation is high and unstable D) when inflation is low
The major limitation of both the Keynesian approach and the monetarist approach is that both
a. focus on the determination of interest rates to the exclusion of price levels. b. study the determination of real GDP equilibrium without including the price level. c. are ways of studying the aggregate demand curve, but to learn anything about the price level and output, the aggregate supply curve must be included in the analysis. d. concentrate on interest rates without considering changes in consumption or net exports.
In Figure 9.2, if the consumption function shifts from C1 to C2, it can be determined that the
A. APC has increased and the MPC has stayed the same at each income level. B. MPC and APC have decreased at each income level. C. MPC has increased and the APC has stayed the same at each income level. D. MPC and APC have increased at each income level.