Money serves the following function(s):
(a) Medium of exchange
(b) Store of value
(c) Unit of account
(d) All of the above
(d)
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When differences between nominal GDP and real GDP result due to price changes and nothing else is compared, an index is created called the
A) consumer price index. B) index of leading indicators. C) GDP deflator. D) inflation index.
The benefit to the firm from hiring one additional worker is called the
A) marginal revenue product of labor. B) total revenue. C) marginal profit. D) marginal revenue.
If the U.S. government decided to pay off the national debt by creating money, what would be the most likely effect?
a. a substantial reduction in real GDP b. a deflationary collapse c. rapid inflation d. an increase in the trade surplus
Answer the following statements true (T) or false (F)
1. In real-business-cycle theory, real output can change without a change in the price level. 2. A coordination failure is said to occur when people do not reach a mutually beneficial equilibrium because they lack some way to jointly coordinate their actions to achieve it. 3. New classical economists see the economy as incapable of self-correction when disturbed and pushed away from its full-employment level of real output. 4. Rational expectations theory assumes that both product and resource markets are competitive and that wages and prices are flexible. 5. In rational expectations theory, a fully anticipated change in aggregate demand or in the price level results in no change in real output.