When the SRAS curve slopes upward, the actual affect of an increase in real autonomous spending on equilibrium real GDP is smaller than predicted by the multiplier because
A) the price level rises B) the price level falls.
C) real GDP increases. D) real GDP decreases.
A
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All of the following arguments are presented in favor of inflation targeting EXCEPT
A) it would draw attention to what the central bank can achieve in practice. B) it would provide an anchor for inflationary expectations. C) it would promote accountability by providing a yardstick by which policy can be measured. D) it would reduce the lags inherent in monetary policy.
After a small hurricane in Florida, unemployment is low as there is a great deal of construction work and businesses run at full capacity. This suggests that
A) the economy is operating above the full-employment level and will eventually adjust back to long-run aggregate supply. B) living standards are falling as employment and economic activity are too high. C) the economy is operating below its long-run level and living standards are less than they would have been without the hurricane. D) the hurricane is beneficial since it is increasing employment and replacing less efficient capital with newer and more efficient capital.
The data on U.S. growth rates during the last half of the 20th century suggest that when the saving rate increases,
a. the rate of growth can increase or decrease depending on the phase of the businesscycle the economy is in b. the rate of economic growth increases c. the rate of economic growth decreases d. the rate of economic growth is unaffected e. countercyclical fiscal policy is neutralized
Suppose that Norma is disappointed in the revenue her custom dress shop is bringing in. She is thinking of raising the price of each? dress, but she asks you for advice.
A. raise the price if demand is elastic. B. lower the price if the income elasticity of demand is positive. C. lower the price if the income elasticity of demand is negative. D. raise the price if demand is inelastic.