When contractionary monetary policy increases the interest rate, it causes the price level to:
A. decrease, and output to decrease.
B. rise, and output to increase.
C. decrease, and output to increase.
D. rise, and output to decrease.
A. decrease, and output to decrease.
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In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to
A) France having a comparative advantage over Germany in ships. B) France having a comparative disadvantage compared to Germany in autos and ships. C) Germany having a comparative advantage over France in autos and ships. D) France having no comparative advantage over Germany. E) France should produce autos.
The fiscal policy target for achieving full employment when an inflationary gap exists is known as the
A. AD excess. B. Fiscal restraint. C. AD shortfall. D. Fiscal stimulus.
The above table has the private demand for loanable funds and the private supply of loanable funds schedules. If the government budget surplus is $200 billion, and there is no Ricardo-Barro effect, the equilibrium real interest rate is ________ and the equilibrium quantity of loanable funds is ________.
A. 4? percent; $500 billion B. 8? percent, $500 billion C. 6? percent; $600 billion D. 8? percent; $700 billion E. 4? percent; $700 billion
Suppose capital and labor are used in fixed proportions so that each machine requires only one worker. If a decline in the price of capital occurs, then the demand for labor will:
A. decrease solely because of the substitution effect. B. increase solely because of the substitution effect. C. increase solely because of the output effect. D. decrease solely because of the output effect.