How does a rise in the federal funds rate affect aggregate demand, real GDP, and the price level?
What will be an ideal response?
A rise in the federal funds leads to investment, consumption expenditure, and net exports all decreasing, which, in turn, decreases aggregate demand. The decrease in aggregate demand then decreases real GDP and lowers the price level.
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If goods X and Y are such that the cross price elasticity between them is negative, and if the income elasticity of X is negative, then these goods are
a. inferior complements b. luxury complements c. income elastic substitutes d. normal substitutes e. income elastic complements
This table represents the revenues faced by a monopolist.PriceQuantity SoldTotal RevenueAverage RevenueMarginal Revenue$1,0001$1,000 $9002$1,800 $8003$2,400 $7004$2,800 $6005$3,000 $5006$3,000 $4007$2,800 Using the information in the table shown, if you were to graph the first two columns, you would have graphed which curve?
A. Marginal revenue B. Total productivity C. Market demand D. Market supply
In the presence of asymmetric information, a fixed-fee contract
A) achieves production efficiency.
B) can lead to opportunistic behavior on the part of the agent.
C) is impossible to write.
D) will result in the principal earning all of the profit.
When the equilibrium price level adjusts to an increase in autonomous investment spending, the impact of the multiplier effect resulting from that spending increase
A. will increase real GDP by an amount smaller than the multiplier effect would indicate. B. is only felt when there are changes in consumption. C. will increase nominal GDP by an amount smaller than the multiplier effect would indicate. D. will have no impact on the real GDP.