If the nominal interest rate is above the equilibrium value, then the quantity demanded of money is ________ than the quantity supplied of money, bond prices will ________, and the nominal interest rate will ________.
A. greater; rise; increase
B. less; rise; decrease
C. greater; fall; increase
D. less; fall; increase
Answer: B
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If the price of rubber (an input to the production of tires) increases:
A. the supply of tires will decrease. B. the demand for tires will decrease C. the demand for tires will increase. D. the supply of tires will increase.
Diminishing returns, so that each additional hour of labor employed produces successively smaller additional amounts of real GDP, exist because
A) additional workers are paid higher wage rates. B) labor is not very productive. C) extra labor produces more output. D) all other factors are held fixed. E) the price level rises as more workers are employed.
The spending multiplier measures the change in equilibrium income that results from a change in:
a. consumption. b. interest rates. c. savings. d. net exports. e. autonomous expenditures.
At equilibrium, each of these is true EXCEPT
A. quantity demanded equals quantity supplied. B. the price has no tendency to change. C. market price equals equilibrium price. D. there may be a shortage or a surplus.