When the supply of credit is fixed, an increase in the price level stimulates the demand for credit, which in turn reduces consumption and investment spending. This argument is called the:
A. real balances effect.
B. interest-rate effect.
C. net exports effect.
D. substitution effect.
Answer: B
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The average price of ten commodities is $330. If an eleventh commodity whose price is $600 is included in the calculation, the new average is:
A) $330.35. B) $450.25. C) $354.54. D) $254.54.
The reason that you don't drink five cups of coffee at breakfast is that
a. the marginal utility of extra cups of coffee eventually diminishes b. most people cannot afford five cups c. the total utility of coffee rises as you consume more cups d. the price of coffee rises as you buy more cups e. the marginal satisfaction derived from cups of coffee remains constant
Strong incentives are provided by:
A. pay on performance. B. fixed salaries and limited pay on performance. C. threatening to outsource the job to low-wage countries. D. fixed salaries.
Recall the Application about the effect of global warming on economic growth to answer the following question(s). According to this Application, over time, as economies adapt to higher temperatures:
A. approximately half the decline in per capita income disappears. B. approximately half the increase in per capita income disappears. C. per capita income does not seem to change. D. real income begins to increase and per capita income begins to decrease.