Suppose that the economy is in long-run equilibrium and the government decided to engage in unexpected contractionary policy by decreasing the money supply
If we assume rational expectations, which of the following statements is correct about the effect of contractionary policy in the long run?
A) The unemployment rate will decrease, real GDP will decrease and the price level will decrease.
B) The unemployment rate will increase, real GDP will increase and the price level will increase.
C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease.
D) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase.
C
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Indicate whether the statement is true or false
An example of a public good is: a. a tornado siren
b. a cake. c. a personal computer. d. a DVD player.
Some people like blue jeans that fit tightly, and some prefer blue jeans with some give. These preferences for small differences in the same kind of product create opportunities for _______________ among the companies that produce them.
a. monopolies b. monopolistic competition c. perfect competition d. price fixing
The fiscal agent of the U.S. government is the
A. Federal Reserve System. B. Securities and Exchange Commission. C. U.S. Treasury. D. Congress.